airtel africa plc...airtel africa is a leading provider of telecommunications and mobile money...

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Airtel Africa plc Half yearly results, ended 30 September 2020

23 October 2020

A resilient business with consistent double-digit growth and stronger performance in Q2

Key highlights

• Customer base grew by 12.0% to 116.4 million

• Revenue on reported basis increased by 10.7% to $1,815m, with Q2 revenue growth of 14.3%

• Revenue growth in constant currency was 16.4% in H1, and 19.6% in Q2. Growth was recorded across all regions: Nigeria up 20.2%, East Africa up 21.9% and Francophone Africa up 4.4%, and services, with voice revenue up by 7.0%, data by 33.4% and mobile money by 30.4%

• Underlying EBITDA increased 12.8% to $812m while constant currency underlying EBITDA growth was 19.3%

• Reported underlying EBITDA margin was 44.7%, up by 85 bps (110 bps in constant currency)

• Operating profit increased by 19.5% to $472m, an increase of 28.3% in constant currency

• Free cash flow was $319m compared to $210m in the same period last year

• Basic EPS was $3.0¢, down 52.9% largely as a result of exceptional items and a one-off derivative gain incurred in the prior year. Excluding these one-off benefits basic EPS would be up 19%. EPS before exceptional items was $3.0¢

• The board declared an interim dividend of $1.5¢ per share in line with the new progressive dividend policy to focus on growth opportunities and faster deleveraging. The new policy aims to grow the dividend annually by a mid to high-single digit percentage from a base of $4 cents per share for FY 2021, until reported leverage falls below 2.0x

Alternative performance measures (Half year ended)

GAAP Measures (Half year ended)

Description Sep-20 Sep-19

Reported Currency

Constant Currency Description

Sep-20 Sep-19 Reported Currency

$m $m change % change % $m $m change %

Revenue 1,815 1,640 10.7% 16.4% Revenue 1,815 1,640 10.7%

Underlying EBITDA 812 719 12.8% 19.3% Operating profit 472 395 19.5%

Underlying EBITDA margin 44.7% 43.9% 85 bps 110 bps Profit before tax 2 281 316 (11.1%)

Free cash flow 319 210 52.0% Profit after tax 2 145 228 (36.6%)

EPS before exceptional items ($ cents)

3.0 4.1 (27.2%) Basic EPS ($ cents) 3.0 6.3 (52.9%)

EPS before exceptional items ($ cents) - restated 1

3.0 3.7 (19.9%) Basic EPS ($ cents) -restated 1

3.0 5.7 (48.2%)

(1) In July 2019, after the announcement of Initial Public Offering (IPO), the company issued 676,406,927 new shares. EPS has been restated considering all the shares as of 30 September 2020 had been

issued on 1 April 2019 for like for like comparison. (2) PBT and PAT decline is largely due to one-off items incurred in the same period in the prior year, excluding benefit of exceptional items and one-off

derivative gain in prior period, PBT and PAT have increased by 28.9% and 31.8% respectively. Refer to page 4 for explanations of GAAP measures movements.

Raghunath Mandava, chief executive officer, on the trading update:

“The first half of our fiscal year included the peak impact of the COVID-19 pandemic in the countries where we operate, as lockdown measures were swiftly implemented to stem the initial spread of contagion. In these unprecedented times, the telecoms industry has emerged as a key and essential service for these economies, allowing customers to work remotely, reduce their travels, keep them connected and allow access to affordable entertainment. In these exceptional circumstances, in the first half, we delivered a strong set of results and as lockdown restrictions eased during Q2 our performance continued to improve with constant currency revenue growth of 19.6%, up 6.6% from the prior quarter.

Importantly, the fundamentals of our business remain strong and revenue growth further benefitted from the execution of our strategy with a specific focus on expanding distribution in the rural areas, investing in our network and increasing 4G coverage, as well as benefitting from the fact we provide an essential service to consumers. In Q2, performance in our mobile money business also significantly improved with constant currency revenue growth of 33.9%, up 8% from prior quarter, as lockdown restrictions were eased and fees on certain transactions, which had been previously waived, were largely reintroduced. We also continued to enter new partnerships with leading institutions such as WorldRemit, MoneyGram, Standard Chartered Bank, and Mukuru to increase use cases and improve customers’ access to digital payments and financial services.

We remain alert to the potential for further disruptions from a second wave of COVID-19 across Africa, and the associated actions of governments to minimise contagion. Nevertheless, we are in a strong financial position to capture the opportunities in a fast-growing region that is vastly underpenetrated in terms of mobile and banking services. We remain confident of delivering long term sustained growth for our shareholders.”

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The results for the six months ended 30 September 2020 are unaudited and in the opinion of management, include all adjustments necessary for the fair presentation of the

results of the same period. The financial information has been prepared based on International Accounting Standard 34 (IAS 34) and apply the same accounting policies,

presentation and methods of calculation as those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 31 March 2020

except to the extent required/ prescribed by IAS 34. This report should be read in conjunction with audited consolidated financial statements and related notes for the year

ended 31 March 2020. The comparative information has been drawn based on Airtel Africa plc’s Audited Consolidated Financial Statements for the year ended 31 March

2020 prepared under International Financial Reporting Standard (IFRS).

About Airtel Africa

Airtel Africa is a leading provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa.

Airtel Africa offers an integrated suite of telecoms solutions to its subscribers, including mobile voice and data services as well as mobile money services, both nationally and internationally. We aim to continue providing a simple and intuitive customer experience through streamlined customer journeys.

Enquiries

Airtel Africa – Investor Relations

Pier Falcione

Anna Kaim

[email protected]

+44 7446 858280

+44 7435 275319

+44 207 493 9315

Hudson Sandler

Nick Lyon

Bertie Berger

[email protected]

+44 207 796 4133

Conference call

The management team will host an analyst and investor conference call / webcast at 9:30 AM UK time, on Friday 23 October 2020, including a Question and Answer session.

In order to participate in the conference call and webcast, and ask questions, please register before the event using the following link:

https://www.diamondpass.net/1158266

Please note that you will only receive your dial in number and link to the webcast upon registration.

mailto:[email protected]

mailto:[email protected]

https://www.diamondpass.net/1158266

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Key financial information

Description Unit of

measure

Half year ended Quarter ended

Sep-20 Sep-19 Reported currency change %

Constant currency change %



Profit and loss summary

Revenue 1 $m 1,815 1,640 10.7% 16.4% 965 844 14.3% 19.6%

Voice revenue $m 972 954 1.9% 7.0% 518 485 6.8% 11.5%

Data revenue $m 548 434 26.4% 33.4% 283 226 25.0% 31.3%

Mobile money revenue 2 $m 181 146 24.3% 30.4% 100 78 27.9% 33.9%

Other revenue 3 $m 164 148 11.0% 15.9% 87 76 14.6% 19.1%

Expenses $m (1,012) (931) 8.7% 13.7% (533) (478) 11.3% 15.8%

Underlying EBITDA 4 $m 812 719 12.8% 19.3% 437 372 17.5% 23.8%

Underlying EBITDA margin % 44.7% 43.9% 85 bps 110 bps 45.3% 44.1% 123 bps 153 bps

Depreciation and amortization 5 $m (328) (300) 9.3% 14.0% (167) (152) 9.7% 13.6%

Operating exceptional items $m (7) (22) (69.2%) (70.6%) (7) (10) (30.9%) (34.0%)

Operating profit 6 $m 472 395 19.5% 28.3% 262 210 24.8% 34.1%

Net finance costs $m (191) (148) 29.2% (92) (66) 39.3%

Non-operating exceptional items $m - 69 (100.0%) - 6 (100.0%)

Profit before tax 7 $m 281 316 (11.1%) 170 150 13.4%

Tax $m (146) (116) 25.6% (85) (68) 25.7%

Tax - exceptional items $m 10 28 (65.2%) 3 14 (79.6%)

Total tax charge $m (136) (88) 55.6% (82) (54) 53.4%

Profit after tax 8 $m 145 228 (36.6%) 88 96 (8.8%)

Non-controlling interest $m (33) (13) 161.9% (18) (6) 207.3%

Profit attributable to parent company shareholder - before exceptional items

$m 113 141 (19.9%) 75 79 (4.6%)

Profit attributable to parent company shareholders

$m 112 215 (48.2%) 70 90 (21.5%)

EPS - before exceptional items cents 3.0 4.1 (27.2%) 2.0 2.1 (5.0%)

EPS - before exceptional items - restated 9

cents 3.0 3.7 (19.9%) 2.0 2.1 (4.6%)

Basic EPS cents 3.0 6.3 (52.9%) 1.9 2.4 (21.8%)

Weighted average no of shares million 3,758 3,413 10.1% 3,758 3,741 0.5%

Capex $m 216 246 (12.4%) 149 147 1.9%

Free cash flow $m 319 210 52.0% 223 147 51.3%

Net debts $m 3,459 3,191 3,459 3,191

Operating KPIs

ARPU $ 2.7 2.7 (0.8%) 4.3% 2.8 2.8 2.1% 6.8%

Total customer base million 116.4 103.9 12.0% 116.4 103.9 12.0%

Data customer base million 39.6 31.9 24.1% 39.6 31.9 24.1%

(1) The revenue in above table includes intra-segment elimination of $50m for the half year ended September 2020 and $42m for the half year ended September 2019.

(2) Mobile money revenue post intra-segment eliminations with mobile services is $131m for the half year ended September 2020 and $104m for the half year ended

September 2019. (3) Other revenue in above table includes messaging, VAS, enterprise, site sharing and handset sale revenue. The same is applicable for segment financial performance

tables. (4) Underlying EBITDA includes other income of $8.4m for the half year ended September 2020 and $10.6m for the half year ended September 2019. (5) Depreciation and amortisation increase of $28m is due to investment in capex and additional spectrum in Nigeria. (6) Operating profit includes $4.8m CSR (Corporate social responsibility) expense in the half year ended September 2020 and $2.9m in the half year ended September

2019. (7) Profit before tax in the half year ended September 2020 included a $0.5m share of gain from joint ventures and associates and $0.4m in previous period. (8) Profit after tax for the half year ended September 2020 is lower due to: (i) benefits in the same period of the prior year of exceptional items (excluding tax EI) of $47m;

(ii) other finance costs had derivative gain of $46m in half year ended September 2019; and (iii) higher tax in half year ended September 2020. (9) In July 2019, following the announcement of the Initial Public Offering (IPO), the company issued 676,406,927 new shares. EPS has been restated considering all the

shares as of 30 September 2020 had been issued on 1 April 2019 for like for like comparison.

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Financial review for the half year, ended 30 September 2020

These results, which include the impact of the COVID-19 impact, demonstrate that Airtel Africa is a highly resilient business with an effective

strategy, delivering strong growth in both customer base and revenue and expansion of underlying EBITDA margin. This performance

continues to be underpinned by a strong focus on the execution of our strategy which is capturing growth opportunities in a fast-growing

region that is vastly underpenetrated in terms of mobile and banking services. As a result, we were able to deliver double-digit revenue

growth of 15.3% in mobile services (9.7% on a reported basis) and 30.4% growth in mobile money (24.3% on a reported basis).

Basic EPS was at $3.0 cents, down by 52.9%, as a result of higher other finance costs due to a $46m derivative gain in the prior period, an increase in tax charges due to higher operating profit and withholding tax on dividends and the recognition in the prior year of one-off gain of $72m related to the expired indemnity to certain pre-IPO investors which was accounted for as an exceptional item. Excluding exceptional items and the one-off $46m derivative gain basic eps would be up 19%.

GAAP measures

Revenue

In the 6 months, ended 30 September 2020, revenue on a reported basis increased by 10.7%, with constant currency growth of 16.4% partially offset by currency devaluation, mainly in Nigeria (6.5%), Zambia (51%) and Kenya (4.5%). As restrictions on movement of people eased in Q2’21, reported revenue growth accelerated to 14.3% and 19.6% in constant currency. Constant currency growth of 16.4% was largely driven by the customer base growth of 12.0%, to 116.4 million and ARPU growth of 4.3% in constant currency. Revenue growth was recorded across all the regions: Nigeria up 20.2%, East Africa up 21.9% and Francophone Africa up 4.4%. Revenue growth was broad based across all segments: voice up 7.0%, data up 33.4% and mobile money up 30.4% in constant currency terms.

Operating profit

Reported operating profit for the half year was $472m, up by 19.5%, as a result of strong revenue growth and lower operating expenditures in proportion to revenue. Operating profit in constant currency grew by 28.3%.

Net finance costs

Net finance costs increased by $43m, driven by higher other finance costs which more than offset the reduced interest costs of $8.7m as a result of lower debt. Increase in other finance costs was primarily driven by $46m of derivative gains which occurred in the comparable period in the prior year.

Taxation

Total tax charges for the period amounted to $136m as compared to $88m in the comparable period last year. This was due to higher operating profit and withholding tax on OPCO dividends. The H1’20 also benefited from higher deferred tax credit recognition of $27m as compared to $9.6m in H1’21.

Profit after tax

Profit after tax was $145m, down by 36.6%, largely as a result of the recognition in the prior year of one-off gain of $72m related to the expired indemnity to certain pre-IPO investors, as well as higher finance costs and tax in the current period. Excluding benefit of exceptional items and one-off derivative gain of $46m in prior period, profit after tax has increased by 31.8%.

Basic EPS

Basic EPS was at $3.0 cents, down by 52.9%, as a result of higher other finance costs due to a $46m derivative gain in the prior period, increase in tax charges due to higher operating profit and withholding tax on dividend, higher non-controlling interest, and the recognition in the prior year of one-off gain of $72m related to the expired indemnity to certain pre-IPO investors which was accounted for as an exceptional item. Excluding exceptional items and the one-off $46m derivative gain basic eps would be up 19%.

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Alternative performance measures1

Underlying EBITDA

Underlying EBITDA amounted to $812m, up by 12.8% in reported currency and 19.3% in constant currency. The underlying EBITDA growth was driven by revenue growth of 16.4% and efficiency in operating expenses. Reported underlying EBITDA margin was 44.7%, an improvement of 85 bps, and 110 bps in constant currency.

Foreign exchange had an adverse impact of $80m on revenue and $39m on underlying EBITDA, largely driven by the devaluation of the Nigerian naira and Zambian kwacha.

Tax

The effective tax rate was 47% broadly in line with the same period in the prior year. The effective tax rate at 47% is higher than the weighted average statutory tax rate of approximately 33%, largely due to the profit mix between various OPCOs and higher withholding tax on OPCO dividends. The adjusted effective tax rate was 44% compared to 37%, largely as a result of recognition of higher deferred tax credit of $27m in the prior period as against to $9.6m during the half year ended 30 September 2020.

Exceptional items

An exceptional item gain of $3m in September 2020 consisted of deferred tax credit in Tanzania amounting to $9.6m which was partially offset by one-off costs of $6.7m in Francophone Africa. Exceptional items for the half year ended 30 September 2019 mainly consisted of $72m gain related to the expired indemnity to certain pre-IPO investors.

Free cash flow

Free cash flow was $319m, up by 52% largely due to the higher underlying EBITDA, $5m of reduced interest payments as a result of lower debt and $31m of lower capex partially offset by an increase of $49m in cash tax as a result of higher operating profit.

EPS before exceptional items

EPS before exceptional items was $3 cents, down by 27.2%, as a result of higher other finance costs due to the recognition of a $46m derivative gain in the prior period, higher non-controlling interest, and increase in tax charges due to the higher operating profit and withholding tax on the dividend. Excluding the one-time derivative gain of $ 46m, restated eps grew 19%.

Net debt and leverage

Net debt to underlying EBITDA decreased to 2.2x, as the increase in underlying EBITDA largely offset a slight increase in net debt.

1 Alternative performance measures (APM) are described on page 43.

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COVID-19

At the beginning of the pandemic, most governments in the countries where we operate acted swiftly to implement and enforce restrictions on the movement of people at the very early stage of the contagion. These swift actions coupled with a continent which benefits from low population density, less frequent travel, and experience in dealing with contagious diseases has resulted in lower infection rates in sub-Saharan Africa. In subsequent months some of these restrictions were eased with local economies improving, although consumers still feel cautious about social and working habits.

During these times, the telecoms industry has emerged as a key and essential service for these economies, allowing customers to work remotely, reduce their travels, keep them connected and allow access to affordable entertainment.

At Airtel Africa we worked to ensure the safety of our employees, customers and partners and we have continued to work closely with governments, regulators, and suppliers to ensure our network remained fully operational and customers could access our services, and continued to support the economies of these countries and the communities we serve.

A strong focus on execution and a strong risk management approach, coupled with the resilience of the telecom sector, contributed to delivering revenue growth of 13% in constant currency for the 3 months ended on 30 June 2020, which was the peak of the pandemic in our footprint. Afterwards, social distancing rules were eased, during the 3 months ended 30 September 2020, and performance also improved as the business was largely unaffected by COVID-19 and delivered revenue growth of 19.6% in constant currency.

In other parts of the world, a so called second wave has already started, with many governments reintroducing stricter social distancing rules, which were relaxed during the summer months.

As Africa lagged the spread of the first wave, it may also lag the spread of a second wave. Despite the resilience demonstrated by the business during the course of the first wave, we are constantly monitoring how the situation is evolving to identify key risks and put in place adequate mitigation plans to minimise any potential disruptions from the re-introduction of stricter social distancing rules.

GOVERNANCE: We have a dedicated executive COVID-19 committee mandated to regularly identify risks, agree on action plans and monitor their execution. As an outcome of the committee’s role, the CEO and CFO have updated the Board on the risks and actions identified whenever relevant. This ensures a direct channel between local management and executive and non-executive directors to ensure actions are agreed and executed quickly.

SAFETY: Our priority is the health and wellbeing of our employees, outsourced partners and customers, and we are making every effort to ensure that our OPCOs have taken all necessary steps to ensure their safety. All offices have an agreed policy in place for remote working, working in shifts and social distancing practices, depending on the critical needs of individual functions. All employees continue to be on full pay and continue to receive full medical insurance cover which includes any diagnostic testing and associated physician visits related to COVID 19. We have also granted immediate paid medical leave for any employees diagnosed with COVID-19.

The outsourced staff in our call centres continue to work from home or in a shift rotation where necessary but following strict social distancing practices. They have all been given the option and equipment to either work from home or, if necessary, from the office following strict social distancing practices and regulatory guidelines. Safety protective equipment and hand sanitisers have also been made available within our shops to keep both our staff and customers safe.

The safety of our customers is paramount to us. We have executed various social educational digital campaigns explaining best practices during the COVID-19 outbreak, and the importance of being safe. We have also made a number of sites across our businesses accessible free of charge to give students continuous access to quality education. Our staff across all our OPCOs have also generously contributed and sacrificed from their salaries a total of $362k which we have matched like for like as a company and donated to the respective governments to support the communities where we operate.

NETWORK and CAPEX: our network remains the main source for many customers for social interactions, work and entertainment. The key business continuity plans we implemented at the start of the pandemic ensured that both active and passive maintenance services could be safely carried out even when the movement of people was restricted. During the last 6 months, despite an increase in data traffic of more than 40%, our network did not experience any significant disruption.

Our strategy of diversifying sourcing across four major providers of network equipment is also protecting us from a company or country-specific supply chain risk.

DISTRIBUTION: our priority was to ensure customers access to our services. When lockdown restrictions were implemented, we increased stock levels of SIM cards and recharge vouchers to ensure availability in our shops and ensure customers could buy recharges whenever convenient. We also encouraged customers to use digital methods of recharge, including through USSD, bank portals or our app. In April 2020 we launched the new MyAirtel selfcare app in all 14 countries. Using the app, a customer can check Airtime or Bundles and purchase them using Airtel Money or any credit or debit cards. It also has Airtel Money features such as Send Money to Airtel and other operators, Pay Bills, Pay Merchants, Scan and pay using Airtel’s or Mastercard’s QR codes and virtual cards Airtel Money and E-Recharge to minimise the impact of any possible disruption to our distribution network. As lockdown restrictions were eased we expanded our distribution, in line with our strategy, and we continued to carry a higher amount of stock to mitigate the risks possible

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future restrictions on the movement of people could have on our stock levels and the ability of customers to access our recharge vouchers.

MOBILE MONEY: during the initial phase of the pandemic mobile revenue growth slowed down to 26.3% as the business was impacted

by social distancing measures and non-essential service closures, reducing the ability of customers to deposit and withdraw cash.

Additionally, several governments asked mobile money operators to waive fees on certain transactions, including person-to-person and

merchant payments. Afterwards, in the 3 months ended 30 September 2020, as lockdown restrictions were eased and most fees on

transaction reinstated, revenue growth for the period was 33.9%, up 7.6% from the prior quarter. We also continue to engage with

governments and regulators to allow certain mobile money outlets to be classified as essential services so that customers can fully access

mobile money services despite restrictions on the movement of people. Mobile money represents 10% of the Group’s revenue.

LIQUIDITY: we continue to benefit from a strong financial position. Free cash flow increased 52% in the last 6 months and underlying EBITDA margin continued to improve by 85bps to 44.7%. Our net debt to underlying EBITDA ratio decreased to 2.2x, compared to the same period in the prior year (from 2.3x), and cash balances in conjunction with nearly $700m of committed undrawn facilities ensure we can meet our financial obligations. We have $2.4bn in long-term bonds with the first repayment of €750m due in May 2021. The next major bond repayment of $505m is due in March 2023. In the last financial year, we extended the maturity of $254m of loans due in December 2020 and January 2021 by an average of 18 months to two years, further improving our liquidity position in this financial year. Additionally, we agreed longer payment terms up to around 12 months with strategic vendors in certain markets in order to continue invest in modernising the network while increasing liquidity.

We have identified several ways to retain cash, reduce costs and mitigate risks from COVID-19. We have continued to invest in revenue driven expenditures while reducing discretionary spend. Additionally, we benefited from lower travel and facility expenses during the period as a result of travel bans and work from home practices.

We continued to invest in our network and our commitment to spend our planned $650m to $700m has not changed. Capex in the 6 months ended 30 September was $216m, a reduction of 12.4% compared to the comparable period in the prior year, however this was largely due the impact of import logistics during the pandemic period. In a worst-case scenario, we would be able to reduce our capex budget significantly without compromising network quality by prioritising expenditure.

See page 25 for our going concern assessment.

FOREIGN EXCHANGE: The global economic slowdown combined with lower oil and commodity prices has resulted in currencies devaluing across our markets, including the Nigerian naira, Kenyan shilling, Ugandan shilling and Zambian kwacha. By far our largest exposure is in Nigeria, which represents 40% of our revenue and 48% of underlying EBITDA. On a 12-month basis, we estimate that a 1% Nigerian naira devaluation will have a negative $14m impact on revenue, $8m on underlying EBITDA and $7m on finance costs.

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Other significant updates

Dividend

The Board approved a new progressive dividend policy as a result of the continued strong business performance, significant opportunities to invest in future growth and the aim to continue to reduce leverage.

The newly adopted dividend policy aims to grow the dividend annually by a mid to high single digit percentage from a base of $4 cents per share for FY 2021, until reported leverage (calculated as net debt to underlying EBITDA) falls below 2.0x.

At the point when reported leverage (calculated as net debt to underlying EBITDA) is below 2.0x, the Board will reassess the dividend policy in light of the growth outlook for the Group.

Additional spectrum

In June 2020, Airtel Malawi plc was allocated a spectrum of 10 MHz in the 2600 band.

Abandonment of merger of Airtel Networks Kenya Limited with Telkom Kenya Limited

In August 2020, Airtel Africa plc announced that its subsidiary Airtel Networks Kenya Limited ("Airtel Kenya") and Telkom Kenya Limited ("Telkom") have decided to no longer pursue completion of the M&A transaction. The transaction was announced in February 2019 and was subject to the satisfaction of various conditions precedent, including regulatory approvals. Despite Airtel Africa plc and Telkom’s respective endeavours to reach a successful closure, the transaction has gone through a very lengthy process which has led the parties to reconsider their stance.

Partnership with UNICEF

In May 2020, Airtel Africa announced a partnership with UNICEF aimed at providing children with access to remote learning and enabling access to cash assistance for their families via mobile cash transfers. Under this partnership, UNICEF and Airtel Africa will use mobile technology to benefit an estimated 133 million school age children currently affected by school closures in 13 countries across sub-Saharan Africa during the COVID-19 pandemic.

Mobile money

(a) Partnership with remittance leading institutions

Airtel Africa entered into several strategic partnerships with MoneyGram, Mukuru and WorldRemit. Through these partnerships, more than 20 million Airtel Money customers in 12 countries can transfer and receive funds across the globe directly from and into their mobile money wallets on their phone. Mobile money service alliances with these leading international money transfer or remittance service providers will extensively enhance the customer access to the digital world.

(b) Partnership with Standard Charted Bank

In August 2020, Airtel Africa announced a strategic partnership with Standard Chartered Bank, a leading international banking group, to drive financial inclusion across key markets in Africa by providing customers with increased access to mobile financial services. Standard Chartered and Airtel Africa work together to co-create new, innovative products aimed at enhancing the accessibility of financial services and ultimately, better serve people across Africa. In line with this, Airtel Money's customers will be able to make real-time online deposits and withdrawals from Standard Chartered bank accounts, receive international money transfers directly to their wallets, and access savings products amongst other services.

(c) Partnership with Mastercard, Samsung and Asante

In September 2020, Airtel Africa announced an expansion of its partnership with Mastercard by launching a Pay-on-Demand payments platform and drive the digital economy across Africa. This Pay-on-Demand platform enables safe, secure, and convenient consumer financing via Samsung devices with an embedded Knox security platform, through Airtel Africa’s network. The partnership facilitates usage-based payments and builds creditworthiness.

These partnerships align with the Group’s strategy of expanding the range and depth of Airtel Money offerings to drive customer growth and penetration.

Information on additional KPIs

Investor relations pack with information on the additional KPIs and balance sheet is available to download on our website at airtel.africa/investors.

https://airtel.africa/investors

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Strategic overview

The Group operates in 14 emerging markets of the sub-Saharan Africa, all these markets are in the developing category. Our markets

are characterised by huge geographies with sparse populations and an average population density of 62 per square km. A combination

of an under-penetrated telecoms market, a young population and rising smartphone affordability, along with low data penetration and

a relatively unbanked population, provide growth opportunities for our data and mobile money segments.

The Group is well positioned to capture growth opportunities presented by promising underlying macroeconomic and demographic

trends in a fast-growing region that is vastly underpenetrated in terms of mobile and banking services. The Group’s footprint is

characterised by low but increasing levels of mobile connectivity, with unique user penetration at 46% highlighting the potential for

growth across the footprint.

The Group’s strategy underpins its medium-term aspirations for delivering growth in revenues and earnings through our belief in

enhancing connectivity and digitising the countries where we operate. To this end, we have invested in expanding our network footprint

and 4G sites to create ample data capacity in our network to support future business growth.

During the reporting period, we continued to make clear progress across each of our core strategic pillars: Win with network, Win with

customers, Win with data, Win with mobile money, Win with cost and Win with people.

Win with network

The Group’s strategy is to invest in our network by expanding 4G coverage and building capacity to cater for the future needs of our

customers and to continue providing them with high-speed data. The expansion of the 4G network across our footprint continued to be

one of our key focus areas. The investment in the 4G network through single RAN technology has resulted in the expansion of our 4G

coverage and enhanced the network’s capacity. 4G sites now contribute 70% of total sites as compared to 59% in the previous period.

We aim to create a leading, modernised network that can provide the data capacity to meet rapidly growing demand and enhance

connectivity and digitalisation in our markets. Data capacity increased by 67% and reached 10,253 terabyte per day. The additional

capacity build in the network is at very marginal cost.

We continued to modernise our network across all countries.

The Group continued to invest in building large fibre capacities and added over 9,000Km of additional fibre (44,000km in total). Further,

we have increased total sites connected on fibre to enhance network uptime and offer high-speed data to more customers.

The Group also acquired additional spectrum of 10 MHz in 2600 band in Malawi in first half of the year.

The Group continued spectrum re-farming activities to maximise network capacity.

The capital expenditure related to investment activities during the first half of the year was $216m, excluding spectrum acquisitions.

Win with customers

The telecoms market in Sub-Saharan Africa is characterised by low penetrated markets, with unique subscriber penetration at 46%. The

Group continued to build a unique mix of multi-brand and exclusive franchise channels, combined with a simplified digital onboarding

app to provide seamless onboarding customer experience, which have enabled us to add quality customers, resulting in double-digit

customer growth of 12.0%. Customer base growth has also helped us to grow our voice revenue by 7% in constant currency.

The Group continued to invest in its distribution network to increase our quality customer base. During the period, the Group added

more activating outlets for KYC and exclusive franchise stores.

We are driving loyalty and consumption through our smart product approach and tailored pricing. We provide simple, transparent

offerings, 'More for more' bundles offering lower unit prices, longer validity and segmented offers based on balance, usage and type of

device.

The digital customer onboarding experience continued to be enhanced through our Digital On-boarding application across markets. The

digital application captures all regulatory requirements and allows most activations to be completed within few minutes of a SIM sale.

The Group’s smart offerings and attractive pricing proposition led to a 17.5% higher usage per customer, contributing to a 7% increase

in voice revenue.

10

Win with data

Data is a key pillar of the Group’s strategy. The Group continued to invest in the expansion of our 4G network, building huge data capacities at marginal cost, expanding home broadband and enterprise business. Our aim is to maximise the value of data-based services and increase data penetration in all our markets. That means encouraging smart phone ownership and increasing data usage at scale.

The improved LTE network contributed to increase in smartphone penetration, in data customers and in up-take of large data volumes, resulting in greater data consumption per customer. Smartphone penetration was up by 2.7ppts to 33.2% and our data customer base was up by 24.1%, representing 34% of our total customer base.

Increased take-up of larger data bundles has helped to push data usage per customer to 2.5GB per customer from 1.6GB per customer in the previous period. All this has contributed to a 33.4% data revenue growth in constant currency. The 4G data usage almost tripled and now contributes to 54.4% to the total data usage on the network.

As a result of the increased penetration and usage of 3G and 4G data customers, data ARPU increased by 10.1% and data revenue up by

33.4% in constant currency.

Win with mobile money

The Group continued to work on enhancing financial inclusion across its footprint through building greater confidence and interest in

Airtel Money. The lower penetration of traditional banking services demands mobile money services to fulfils the needs of largely

unbanked customers. We aim to drive the uptake of Airtel Money services in all our markets, harnessing the ability of a profitable mobile

money business model to enhance financial inclusion in some of the most 'unbanked' populations in the world.

The Group continued to expand the distribution network of kiosks, mini shops and dedicated Airtel Money branches, so that customers

can access cash. It also introduced additional mobile money services, including merchant and commercial payments, benefits transfers,

loans and savings building international money transfer services through partnerships.

Mobile money business now serves over 20 million mobile money customers, representing 17.3% of our total customers and almost

27.8% excluding Nigeria. Expanded distribution and an enhanced offering helped to increase mobile money customers by 29.6%, to

20.1m, leading to a $47bn (Q2’21 annualised) transaction value in constant currency.

Mobile money continues to be one of the Airtel Africa’s fastest-growing business segments, delivering revenue growth of 30.4% in first

half of the year. It is an increasingly more important part of our business and currently accounts for 10.3% of our total revenue in constant

currency (Q2’21).

The Group continued to enhance its product portfolio for customers by entering into additional partnerships with leading institutions

such as Mastercard, Western Union, WorldRemit, MoneyGram, Standard Chartered Bank, Eco Bank and Mukuru. Partnerships like these

improve customers’ access to digital payments and financial services, allowing people to receive and send funds across the globe. These

partnerships continue to build on our strategy to create additional use cases for our customers and expand our mobile money eco-

system.

Win with cost

The Group has an efficient operating model, focused on enhancing cost efficiency and digitalisation initiatives. We embrace robust cost

discipline and continuously seek to improve processes to deliver one of the highest underlying EBITDA margins in the industry. We use

the latest technology to optimally design our network to bring enhanced efficiencies to our capital expenditure.

As we actively expand our business, various cost efficiency initiatives were undertaken during the period mainly related to: energy and

loading cost savings as we benefit from network modernisation, a shift towards to local currency contracts, optimisation of bandwidth

cost and implementation of dynamic and contextual IVR (Interactive voice response). In addition to this, there were lower travel and

facility expenses during the period due to restriction in movement and working from home.

As a result, operating expenditure as a percentage of revenue improved by 1 ppts and underlying EBITDA margin expanded by 85 bps to

44.7% owing to double-digit revenue growth and cost efficiencies.

Win with people

The Group’s diverse and talented employees continue to demonstrate a growth mind-set, commitment to winning and excellence in

execution.

Our resilience as a team, tenacity and focus on the customer was reflected even in the face of the COVID-19 challenges. The expanded

leadership teams, along with the strong functional heads and empowered local OPCOs remain collaborative and agile, fostering an

11

environment of learning and innovation. The Group’s structure allows for open communication and executional agility which drives

faster growth and keeps the Group closer to the markets where it operates.

The focus on learning and development allows the Group’s employees to remain knowledgeable and experts in their functional areas.

The revamped digital learning platforms leveraging engaging content across varied areas, delivering curated content to all employees.

The Group’s employees have completed over 9,000 online courses during the first half of the year which include both functional and

leadership programs.

The Group reward systems are based on simple and consistent metrics which drive the right behaviour. We continue to create

opportunities to learn and develop employees across all our operations. The Group’s employee benefits are aligned to best market

practices and include contributing to 100% of the cost of medical insurance for all on roll employees.

Gender diversity remains a key focus for the Group, with female Exco representation standing at 23% and overall female representation

at 27%.

As part of the Group’s commitment to receiving stakeholder feedback, it commenced the annual Employee Engagement survey. This

feedback is used to enhance the overall employee experience.

12

Financial review for the half year, ended 30 September 2020

Nigeria

Description Unit of

measure

Half Year ended Quarter ended





Summarised statement of operations

Revenue $m 718 640 12.1% 20.2% 377 327 15.2% 23.1%

Voice revenue $m 413 398 3.9% 11.4% 216 200 8.3% 15.8%

Data revenue $m 257 199 28.9% 38.1% 135 105 27.9% 36.7%

Other revenue $m 48 43 10.6% 18.5% 26 22 16.5% 24.5%

Underlying EBITDA $m 386 341 13.4% 21.5% 204 174 17.6% 25.7%


Depreciation and amortisation $m (115) (89) 28.9% 38.1% (63) (45) 40.9% 49.7%

Exceptional item $m - (3) (100.0%) (100.0%) - (2) (100.0%) (100.0%)


Capex $m 97 115 (15.2%) (15.2%) 67 62 7.6% 7.6%

Operating free cash flow $m 289 226 28.0% 42.6% 137 112 23.2% 36.9%

Operating KPIs

ARPU $ 2.8 2.8 (0.1%) 7.0% 2.9 2.8 2.4% 9.4%



(1) The operating profit in above table includes CSR (Corporate social responsibility) expense of $0.2m for the half year ended September 2020.

Constant currency revenue grew by 20.2% while in reported currency revenue grew by 12.1% as a result of the Nigerian naira devaluation

by 6.5% (YoY). Revenue growth in Q2’21 was 23.1% as a result of the easing of restrictions on movement of people which was

implemented in the first quarter due the COVID-19 pandemic.

Voice revenue increased 11.4% to $413m, this was driven by customer base increase of 11.5% which was partially offset by a 0.8% drop

in voice ARPU. The customer base growth was driven by the expansion of our distribution network and the expansion of network

infrastructure. Voice usage per customer increased by 13.5%. On the other hand, the ARPU decline of 0.8% was a result of a change in

the customer mix due to the COVID-19 pandemic in first quarter.

Data revenue growth of 38.1% in constant currency was supported by 22.8% growth in data customers and 17.4% growth in data ARPU.

Data customer penetration was up by 4ppts from the previous period and reached 43.1% as of September 2020. The data customer

base growth of 22.8% was a result of the expansion of 4G network, with 76% of total sites now on 4G. The total data usage on our

network grew by 89.5%, almost double the previous period. 4G data usage almost tripled and now contributes to 60% of the total data

usage. Data usage per customer was up by 61% and the data revenue accounted for 35.7% of total revenue, up by 4.6ppts from 31.1%

in previous period.

Underlying EBITDA grew by 13.4% in reported currency, with constant currency growth of 21.5%. Underlying EBITDA margin improved

by 60 bps in constant currency as a result of opex efficiencies. In Q2’21, underlying EBITDA grew by 25.7%, with margin improvement of

112 bps, mainly as a result of the bad debt collection of Q1’21 from enterprise customers.

Capital expenditure amounted to $97m as against $115m in previous period. Capex expenditure was lower during the period because

of lockdown measures in April and May 2020.

Operating free cash flow was $289m, up by 42.6%, largely as a result of double-digit underlying EBITDA growth and slightly lower capital

expenditure in first half of the year.

13

East Africa1

Description Unit of

Measure







Revenue 2 $m 659 578 14.1% 21.9% 355 301 17.7% 26.0%

Voice revenue $m 312 296 5.4% 12.8% 169 155 9.4% 17.2%

Data revenue $m 174 144 21.2% 29.6% 88 74 20.1% 28.7%


Other revenue $m 74 66 12.7% 18.7% 39 34 16.3% 22.5%



Depreciation and amortisation $m (107) (117) (9.1%) (3.5%) (53) (58) (8.0%) (2.6%)

Exceptional item $m - (5) (100.0%) (100.0%) - (2) (100.0%) (100.0%)

Operating profit $m 184 111 66.2% 82.3% 110 63 75.7% 94.5%

Capex $m 81 60 35.7% 35.7% 62 30 106.2% 106.2%


Operating KPIs

ARPU $ 2.2 2.2 0.7% 7.7% 2.4 2.3 3.5% 10.8%



(1) This business segment includes Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia. (2) The above table includes intra-segment eliminations of $33m for the half year ended September 2020 and $26.5m for the half year ended September 2019. (3) Mobile money revenue post intra-segment eliminations with mobile services is $99m for the half year ended September 2020 and $72.5m for the half year ended September

2019. (4) The operating profit in above table includes CSR (Corporate social responsibility) expense of $1.6m for the half year ended September 2020.

In East Africa, performance continued to be strong with 14.1% revenue growth in reported currency and 21.9% in constant currency. Revenue growth in Q2’21 accelerated to 17.7% and constant currency growth of 26% was supported by growth in all key business segments. Growth was broad-based across all services and all markets, as 5 out of 6 OPCOs delivered more than 20% revenue growth. Constant currency revenue growth was partially offset by the currency devaluation mainly in Zambia and Kenya.

Voice revenue was $312m, with double-digit growth of 12.8% in constant currency as a result of a 13.9% customer base growth and 20.1% growth of voice usage per customer, which was marginally offset by a 0.4% voice ARPU drop. Total minutes on the network were up by 36% led by an increase in voice usage per customer.

Data revenue amounted to $174m, up by 29.6% supported by data customer base growth of 22.9% and data ARPU increase of 5.1%.

Growth was recorded across all OPCOs, driven by the expansion of network infrastructure, with 68.6% of the sites now on our 4G

network as compared to 60% during the previous period. Our mobile network in Zambia, Malawi and Uganda now consists of 100% of

4G sites. The total data usage on our network grew by 83.8% and 4G data usage almost tripled and now contributes 44.6% to the total

data usage. Data usage per customer reached 2.6GB, up by 49.1% from 1.7GB per customer in previous period.

During the period “Pay as you Go tariffs” in certain markets were updated and this resulted in a revenue reallocation of bundle products

of voice and data in such tariffs. On a like for like basis voice and data revenue growth was 8.7% and 38% respectively.

Mobile money revenue grew by 42.9% in constant currency, largely driven by growth in Zambia, Tanzania, Uganda and Malawi. Revenue growth of 50.1% in Q2’21 was largely driven by the removal of certain restrictions on movement as a result of the COVID-19 pandemic and the reinstatement of P2P fees in the majority of markets which were temporarily waived in the first quarter. The revenue growth of 42.9% was driven by a 29.5% increase in our customer base and a 23.9% growth in the transaction value per customer, supported by the expansion of our distribution network.

Underlying EBITDA margin was 44.3%, an improvement of 402 bps in reported currency and 431 bps in constant currency, as a result of accelerated growth in revenue and efficiency improvement in operating expenses.

Capital expenditure during the period was $81m as against $60m in the previous period. Capex expenditure was higher during the period as a result of planned network expansion.

Operating free cash flow was at $211m, up by 34.9% as a result of improvement in underlying EBITDA.

14

Francophone Africa1

Description Unit of

measure







Revenue 2 $m 445 426 4.6% 4.4% 236 217 8.6% 6.4%

Voice revenue $m 252 265 (4.9%) (5.3%) 135 133 1.4% (0.9%)

Data revenue $m 117 91 29.2% 29.2% 60 48 26.1% 23.6%


Other revenue $m 45 42 5.4% 6.1% 23 22 5.7% 5.0%

Underlying EBITDA $m 146 140 4.4% 4.1% 73 76 (4.2%) (5.9%)

Underlying EBITDA margin % 32.8% 32.9% (4) bps (9) bps 30.8% 34.9% (410) bps (404) bps


Exceptional item $m (7) (10) (35.5%) (39.3%) (7) (5) 24.0% 16.5%

Operating profit $m 41 37 11.3% 11.0% 16 24 (31.0%) (29.8%)

Capex $m 36 69 (47.8%) (47.8%) 20 54 (63.4%) (63.4%)


Operating KPIs

ARPU $ 3.7 3.7 (1.7%) (1.9%) 3.8 3.8 1.6% (0.4%)



(1) This business segment includes Niger, Chad, Gabon, Democratic Republic of the Congo, Republic of the Congo, Madagascar, and Seychelles. (2) The above table includes intra-segment eliminations of $18m for the half year ended September 2020 and $15.6m for the half year ended September 2019. (3) Mobile money revenue post intra-segment eliminations with mobile services is $31.6m for the half year ended September 2020 and $28m for the half year ended September

2019. (4) The operating profit in above table includes CSR (Corporate social responsibility) expense of $1m for the half year ended September 2020.

Performance in Francophone Africa continued to improve, as reported revenue was up 4.6% and constant currency growth was 4.4%. In Q2’21, reported currency growth of 8.6% benefitted from a 6.6% appreciation of the Central African and West Africa franc and 6.4% constant currency growth. Revenue growth of data, mobile money and other revenue was partially offset by a decline in voice revenue. Performance across the region was mixed, with growth in Democratic Republic of the Congo (DRC), Gabon and Chad partially offset by revenue decline in other countries in the region.

Voice revenue decreased by 5.3%, largely due to a drop in interconnect charges in Gabon and Chad, and overall market weakness in

some countries in the region caused by macroeconomic conditions. Total minutes on network grew by 14.7% while voice usage per

customer was up by 7.8%.

Data revenue increased by 29.2% in constant currency, supported by strong customer growth of 31.9% and data ARPU growth of 1.4%.

Additionally, smartphone penetration increased by 4.7 ppts and reached 29.4%. Total data usage more than doubled and data usage

per customer was up 73.5%. Our expansion of 4G network and “More for More” bundle offerings resulted in a data customer base

increase. The 4G data usage more than doubled and now contributes to 50.6% of total data usage on network.

Mobile money revenue was $49m, with constant currency growth of 12.5% largely driven by a 31.9% increase in customer base

supported by the expansion of our distribution network through more agents, kiosks and Airtel Money branches.

Underlying EBITDA margin of 32.8%, was broadly flat. In Q2’21, the decline in underlying EBITDA margin was largely due to a $6m

settlement of indirect tax related to prior years.

Capital expenditure during the period was $36m, lower due to increased network modernisation in the previous period. Operating free cash flow was at $110m, up 54.5% as a result of an improvement in underlying EBITDA and lower capital expenditure.

15

Mobile services

Description Unit of

measure







Revenue 1 $m 1,689 1,540 9.7% 15.3% 891 790 12.8% 17.9%




Operating exceptional items $m (7) (18) (62.9%) (64.4%) (7) (9) (24.6%) (30.6%)


Capex $m 211 241 (12.4%) (12.4%) 147 145 1.2% 1.2%


Operating KPIs

Mobile voice

Voice revenue $m 972 954 1.9% 7.0% 518 485 6.8% 11.5%

Customer base million 116.4 103.9 12.0% 116.4 103.9 12.0%

Voice ARPU $ 1.4 1.6 (8.7%) (4.1%) 1.5 1.6 (4.6%) (0.4%)

Mobile data

Data revenue $m 548 434 26.4% 33.4% 283 226 25.0% 31.3%


Data ARPU $ 2.5 2.4 4.4% 10.1% 2.5 2.4 1.7% 6.9%

(1) Mobile service revenue after intersegment eliminations amounted to $1,687m for the half year ended September 2020 and $1,538m for the half year ended September 2019. (2) The operating profit in above table includes CSR (Corporate social responsibility) expense of $3m for the half year ended September 2020 and $0.4m for the half year ended

September 2019.

Revenue increased by 9.7% on a reported basis and 15.3% growth in constant currency, with both voice and data revenue contributing to mobile services revenue growth.

Voice revenue in constant currency growth was 7%, driven by customer base growth of 12%, as a result of the expansion of the distribution network and network infrastructure, partially offset by a 4.1% drop in voice ARPU. Total minutes on the network were up 31.1% as a result of the increase in voice usage per customer by 17.5%. ARPU declined by 4.1% in constant currency terms, largely driven by a drop in interconnect charges across key markets in East Africa and Francophone Africa.

Data revenue increased 33.4% in constant currency, as a result of growth in our data customer base by 24.1%, an increase in data ARPU and the accelerated 4G network rollout. Data customer base was 34.0% of our total customer base, from 30.7% compared to the previous period. Total data usage was up 90.1% driven by both a customer base increase of 24.1% and a 56.9% growth in data usage per customer. Total data usage per customer per month was 2.5GB, largely resulting from our 4G network expansion and popular data bundles offerings. Growing penetration on our 3G and 4G network resulted in data ARPU growth of 10.1%. 4G data usage almost tripled and now contributes 52.8% to the total data usage on the network.

Data revenue now contributes 30.2% to the total revenue, up from 26.4% in the previous period.

16

Mobile money

Description Unit of

measure







Revenue 1 $m 181 146 24.3% 30.4% 100 78 27.9% 33.9%


Underlying EBITDA Margin % 48.6% 48.2% 46 bps 21 bps 48.7% 48.2% 52 bps 25 bps


Operating profit $m 83 67 23.3% 28.8% 47 37 27.9% 33.2%

Capex $m 4 3 15.3% 15.3% 2 2 13.0% 13.0%


Operating KPIs

Mobile money key KPIs

Transaction value $m 20,671 14,968 38.1% 45.7% 11,664 7,856 48.5% 56.4%

Active customers million 20.1 15.5 29.6% 20.1 15.5 29.6%

Mobile money ARPU $ 1.6 1.6 (2.4%) 2.4% 1.7 1.7 (1.5%) 3.0%

(1) Mobile money service revenue post intra-segment eliminations with mobile services is $131m for the half year ended September 2020 and $104m for the half year ended September 2019.

Reported mobile money revenue was $181m, up 24.3%, with a constant currency growth of 30.4%. Revenue growth of 33.9% in Q2’21 benefitted from the easing of lockdown restrictions which impacted the first quarter. Additionally, P2P fees, which were temporarily waived in the first quarter to support economies and communities, were mostly reinstated during Q2’21 in majority of markets.

The revenue growth of 30.4% was driven by a customer base growth of 29.6% and a 45.7% growth in transaction value. Our distribution network continued to expand through the addition of exclusive kiosks, Airtel Money branches and the mobile money agent network.

Underlying EBITDA amounted to $88m, up by 25.5% in reported currency and 30.9% in constant currency. Underlying EBITDA margin was 48.6%, an increase of 46 bps in reported currency and 21 bps in constant currency. Total transaction value increased by 45.7% in constant currency, as a result of our customer base growth of 29.6% and a 14.5% growth in transaction value per customer per month. The Q2’21 annualised transaction value reached $47bn and mobile money revenue accounted for 10.3% of total revenue.

The mobile money customer base grew to 20.1m, up 29.6% over the previous period, with Airtel Money customers representing 17.3% of our total customers. Mobile money ARPU was up 2.4%, driven by the increase in transaction values and a higher contribution from merchant payments, cash out and recharge of mobile services through Airtel Money.

17

Forward looking statements

This document contains certain forward-looking statements including "forward-looking" statements made within the meaning of Section 21E of the United States Securities Exchange Act of 1934, regarding our intentions, beliefs or current expectations concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances occurring from time to time in the countries and markets in which the Group operates.

These statements are often, but not always, made through the use of words or phrases such as "believe," "anticipate," "could," "may," "would," "should," "intend," "plan," "potential," "predict," "will," "expect," "estimate," "project," "positioned," "strategy," "outlook", "target" and similar expressions.

It is believed that the expectations reflected in this document are reasonable, but they may be affected by a wide range of variables that could cause actual results to differ materially from those currently anticipated.

All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual future financial condition, performance and results to differ materially from the plans, goals, expectations and results expressed in the forward-looking statements and other financial and/or statistical data within this communication.

Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are uncertainties related to the following: the impact of competition from illicit trade; the impact of adverse domestic or international legislation and regulation; changes in domestic or international tax laws and rates; adverse litigation and dispute outcomes and the effect of such outcomes on Airtel Africa’s financial condition; changes or differences in domestic or international economic or political conditions; the ability to obtain price increases and the impact of price increases on consumer affordability thresholds; adverse decisions by domestic or international regulatory bodies; the impact of market size reduction and consumer down-trading; translational and transactional foreign exchange rate exposure; the impact of serious injury, illness or death in the workplace; the ability to maintain credit ratings; the ability to develop, produce or market new alternative products and to do so profitably; the ability to effectively implement strategic initiatives and actions taken to increase sales growth; the ability to enhance cash generation and pay dividends and changes in the market position, businesses, financial condition, results of operations or prospects of Airtel Africa.

Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser. The forward-looking statements contained in this document reflect the knowledge and information available to Airtel Africa at the date of preparation of this document and Airtel Africa undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on such forward-looking statements.

No statement in this communication is intended to be, nor should be construed as, a profit forecast or a profit estimate and no statement in this communication should be interpreted to mean that earnings per share of Airtel Africa plc for the current or any future financial periods would necessarily match, exceed or be lower than the historical published earnings per share of Airtel Africa plc.

Financial data included in this document are presented in US$ rounded to the nearest million. Therefore, discrepancies in the tables between totals and the sums of the amounts listed may occur due to such rounding. The percentages included in the tables throughout the document are based on numbers calculated to the nearest $1,000 and therefore minor rounding differences may results in the tables. The growth numbers YoY are provided on constant currency basis unless stated differently.

18

Interim Condensed Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

(All amounts are in US Dollar Mns; unless stated otherwise)

Notes

For six months ended

30 September 2020 30 September 2019

Income

Revenue 5 1,815 1,640

Other income 8 11

1,823 1,651

Expenses Network operating expenses 330 297

Access charges 177 184

License fee / spectrum usage charges 95 94

Employee benefits expense 142 111

Sales and marketing expenses 86 83

Impairment loss on financial assets 3 2

Other expenses 190 166

Depreciation and amortisation 328 319

1,351 1,256

Operating profit 472 395

Finance costs 196 197

Finance income (4) (49)

Non-operating income - (70)

Share of profit of associate (1) (0)

Profit before tax 281 316

Tax expense 6 136 88

Profit for the period

145 228

Profit before tax (as presented above) 281 316

Add: Exceptional items (net) 7 7 (46)

Underlying profit before tax 288 270

Profit after tax (as presented above) 145 228

Add: Exceptional items (net) 7 (3) (74)

Underlying profit after tax 142 154

19

Notes

For six months ended


Profit for the period (continued from previous page) 145 228

Other comprehensive income ('OCI')

Items to be reclassified subsequently to profit or loss: Net gain/(loss) due to foreign currency translation differences 29 (24)

Net (loss)/gain on net investments hedge (11) 7

Net loss on cash flow hedge - (3)

18 (20)

Items not to be reclassified subsequently to profit or loss: Re-measurement loss on defined benefit plans (1) (1)

Tax credit on above

0 0

(1) (1)

Other comprehensive income/(loss) for the period 17 (21)

Total comprehensive income for the period 162 207

Profit for the period attributable to: 145 228

Owners of the Company 112 215

Non-controlling interests 33 13

Other comprehensive income/(loss) for the period attributable to: 17 (21)

Owners of the Company 19 (21)

Non-controlling interests (2) (0)

Total comprehensive income for the period attributable to:

162 207

Owners of the Company 131 194

Non-controlling interests 31 13

Earnings per share

Basic 8 3.0c 6.3c

Diluted 8 3.0c 6.3c

20

Consolidated Statement of Financial Position


Notes

As of

30 September 2020 31 March 2020

Assets

Non-current assets

Property, plant and equipment 9 1,941 1,832

Capital work-in-progress 9 183 259

Right of use assets 730 639

Goodwill 3,960 3,943

Other intangible assets 482 456

Intangible assets under development 31 30

Investment in associate 3 3

Financial assets

- Investments 0 0

- Derivative instruments 0 0

- Security deposits 8 7

- Others 0 1

Income tax assets (net) 28 39

Deferred tax assets (net) 314 333

Other non-current assets 102 112

7,782 7,654

Current assets

Inventories 6 3

Financial assets


- Trade receivables 138 132

- Cash and cash equivalents 1,072 1,010

- Other bank balances 7 6

- Balance held under mobile money trust 376 295

- Others 62 66

Other current assets 163 149

1,830 1,671

Total assets 9,612 9,325

21

Notes

As of


Current liabilities

Financial liabilities

- Borrowings 12 359 235

- Current maturities of long-term borrowings 12 1,103 429

- Lease liabilities 222 199


- Trade payables 431 416

- Mobile money wallet balance 372 292

- Others 298 461

Provisions 72 70

Deferred revenue 134 124

Current tax liabilities (net) 110 144

Other current liabilities 138 115

3,243 2,488

Net current liabilities (1413) (817)

Non-current liabilities


- Borrowings 12 1,859 2,446

- Lease liabilities 1,008 970


- Others 63 15

Provisions 25 23

Deferred tax liabilities (net) 66 69

Other non-current liabilities 26 29

3,051 3,556

Total liabilities 6,294 6,044

Net Assets 3,318 3,281

Equity

Share capital 11 3,420 3,420

Retained earnings 2,803 2,805

Other reserve (2,816) (2,837)

Equity attributable to owners of the company 3,407 3,388

Non-controlling interests ('NCI') (89) (107)

Total equity 3,318 3,281

The accompanying notes form an integral part of these interim condensed consolidated financial statements.

22

Consolidated Statement of Changes in Equity (All amounts are in US Dollar Mns; unless stated otherwise) Equity attributable to owners of the company

Non-controlling interests

(NCI)

Total equity

Share Capital

Share premium

Retained earnings

Other reserves

Equity attributable to owners of the

company

No of shares Amount Transactions

with NCI reserve Other components

of equity

As of 1 April 2019 3,081,744,577 3,082 470 1,688 (580) (2,034) 2,626 (196) 2,430 Profit for the year - - - 215 - - 215 13 228 Other comprehensive loss - - - - - (20) (20) (0) (20)

Total comprehensive income / (loss) - - - 215 - (20) 195 13 208 Transaction with owners of equity

Reduction in nominal value of shares [Note 11 (1)] - (1,541) - - - - (1,541) - (1,541) Issue of deferred share capital [Note 11 (1)] 3,081,744,577 1,541 - - - - 1,541 - 1,541 Issue of redeemable deferred share capital [Note 11 (3)] 50,000 0 - - - - 0 - 0 Issue of share capital [Note 11 (2)] 676,406,927 338 342 - - - 680 - 680 Issue of share capital to NCI - - - - - - - 13 13 Share issue costs - - (4) (13) - - (17) - (17) Share stabilisation proceeds - - - - - 8 8 - 8 Employee share-based payment expenses - - - - - - 0 - 0 Reversal of indemnities - - - 64 - - 64 - 64 Dividend (including tax) to NCI - - - - - - - (2) (2)

As of 30 September 2019 6,839,946,081 3,420 808 1,954 (580) (2,046) 3,556 (172) 3,384

Profit for the period - - - 155 - - 155 25 180 Other comprehensive loss - - - 1 - (205) (204) 9 (195)

Total comprehensive income / (loss) - - - 156 - (205) (49) 34 (15) Transaction with owners of equity Issue of redeemable deferred share capital [Note 11 (3)] (50,000) (0) (0) (0) Issue of share capital to NCI - - - - - - - - - Share issue costs - - 0 (0) - - (0) - (0) Share stabilisation proceeds - - - - - (1) (1) - (1) Employee share-based payment expenses - - - - - 0 0 - 0 Court approved reduction in share premium - - (808) 808 - - - - - Transactions with NCI - - - - (5) - (5) 36 31 Dividend to Company's shareholders - - - (113) - - (113) - (113) Dividend (including tax) to NCI - - - - - - - (5) (5)

As of 31 March 2020 6,839,896,081 3,420 - 2,805 (585) (2,252) 3,388 (107) 3,281

Profit for the period - - - 112 - - 112 33 145 Other comprehensive loss - - - (1) - 20 19 (2) 17

Total comprehensive income / (loss) - - - 111 - 20 131 31 162

Transaction with owners of equity

Employee share-based payment expenses - - - (0) - 1 1 - 1 Loss on fair value of own shares - - - (0) - 0 - - - Purchase of own shares - - - - - (0) (0) - (0) Transactions with NCI - - - - (0) - (0) 0 (0) Dividend to company's shareholders [Note 4(a)] - - - (113) - - (113) - (113) Dividend (including tax) to NCI - - - - - - - (13) (13)

As of 30 September 2020 6,839,896,081 3,420 - 2,803 (585) (2,231) 3,407 (89) 3,318

23

Statement of Cash Flows (All amounts are in US Dollar Mns; unless stated otherwise)

For the six months ended


Cash flows from operating activities Profit before tax 281 316 Adjustments for - Depreciation and amortisation

328 319

Finance income

(4) (49) Finance cost

196 197

Share of profit of associate

(1) (0) Non-operating adjustments

- (70)

Other adjustments

5 (7)

Operating cash flow before changes in working capital 805 707 Changes in working capital Increase in trade receivables

(0) (12)

(Increase)/decrease in inventories

(3) 0 Decrease in trade payables

(7) (20)

Increase in mobile money wallet balance

80 27 (Decrease)/Increase in provisions

(0) 1

Increase in deferred revenue

9 8 Decrease in income received in advance

(1) (8)

Decrease in other financial and non financial liabilities

(0) (9) Increase in other financial and non financial assets

(21) (2)

Net cash generated from operations before tax 862 692 Income taxes paid (118) (69)

Net cash generated from operating activities (a) 744 623

Cash flows from investing activities Purchase of property, plant and equipment and capital work-in-progress

(359) (349)

Purchase of intangible assets

(8) (35) Interest received

10 14

Net cash used in investing activities (b) (357) (370)

Cash flows from financing activities Proceeds from issue of shares to Airtel Africa plc shareholders

- 680

Proceeds from sale of shares to non-controlling interests

- 3 Acquisition of non-controlling interests (0) - Purchase of own shares by ESOP trust

(0) -

Payment of share issue expenses

- (16) Proceeds from borrowings

253 144

Repayment of borrowings

(121) (319) Repayment of lease liabilities

(109) (89)

Dividend paid to non-controlling interests

(6) - Dividend paid to Company's shareholders

(113) -

Interest and other finance charges paid

(167) (176) Share stabilisation proceeds

- 7

Proceeds from cancellation of derivatives

- 122

Net cash (used)/generated from financing activities (c) (263) 356

Increase in cash and cash equivalents during the period (a+b+c) 124 609 Currency translation differences relating to cash and cash equivalents (3) 3 Cash and cash equivalent as at beginning of the period 1,087 870 Cash and cash equivalents as at end of the period (Note 10) (1) 1,208 1,482

(1) Includes balance held under mobile money trust of USD 376m (September 2019: USD 265m) on behalf of mobile money customers which are not available for use by the group. Starting 31 March 2020, the group considers balance held under mobile money trust to be cash and cash equivalent. Consequent reclassification has been made to the cash flow statement for the six months ended 30 September 2019.

24

Notes to Interim Condensed Consolidated Financial Statements


1. Corporate information

Airtel Africa Limited was incorporated as a Private Company limited by shares on 12 July 2018 as a subsidiary of Airtel Africa

Mauritius Limited (‘the Parent’), a Company registered in Mauritius. It was subsequently re-registered as Airtel Africa plc (‘the

Company’) on 13 June 2019. The Company is incorporated and domiciled in England and Wales (registration number 11462215).

The registered address of the Company is First Floor, 53/54 Grosvenor Street, London W1K 3HU, United Kingdom.

The Company listed on London Stock Exchange (‘LSE’) on 3 July 2019 and on Nigerian Stock Exchange (‘NSE’) on 9 July 2019.

The Company, together with its subsidiary undertakings (hereinafter referred to as ‘the group’) has operations in Africa. The

principal activities of the group and its associate consist of provision of telecommunication services and mobile money services.

2. Basis of preparation

These interim condensed consolidated financial statements (‘financial statements’) have been prepared to comply in all

material respects with the International Financial Reporting Standards (‘IFRS’) as adopted by the European Union (‘EU’) and the

disclosure requirements of the Listing Rules. These financial statements are unaudited.

These financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’. Accordingly, the

financial statements do not include all the information required for a complete set of financial statements, and should be read

in conjunction with the group’s annual consolidated financial statements for the year ended 31 March 2020. Further, selected

explanatory notes have been included to explain events and transactions that are significant for the understanding of the

changes in the group’s financial position and performance since the latest annual consolidated financial statements.

These financial statements for the six months ended 30 September 2020 do not constitute statutory accounts as defined in

section 434 of the U.K. Companies Act 2006

The information relating to the year ended 31 March 2020 is an extract from the group’s published annual report for that year,

which has been delivered to the Registrar of Companies, and on which the auditors’ report was unqualified and did not contain

any emphasis of matter or statements under section 498(2) or 498(3) of the UK Companies Act 2006.

These financial statements of the group for the six months ended 30 September 2020 were authorised by the Board of Directors

on 22 October 2020.

These financial statements apply the same accounting policies, presentation and methods of calculation as those followed in

the preparation of the group’s annual consolidated financial statements for the year ended 31 March 2020. Further, there have

been no changes in critical accounting estimates, assumptions and judgements.

25

During the six months ended 30 September 2020, the group has capitalized deferred spectrum license payments, for which the

group is under an obligation for payment till the expiry of the license period. Consequently, intangible assets have been

recognized at the present value of such payments amounting to USD 63m with a corresponding liability of USD 61m and reversal

of prepayments of USD 2m. The balances of comparative periods have not been restated considering that such amounts are

not material to the group.

3. Basis of measurement

The financial statements have been prepared under the historical cost convention except for few financial instruments held at

fair value and are presented in United States Dollars (USD), with all values stated in USD million and rounded to the nearest

million except when otherwise indicated. Further, amounts which are less than half a million are appearing as ‘0’.

3.1 Going concern

These financial statements have been prepared on a going concern basis. In making this going concern assessment, the group

has considered cash flow projections to November 2021 under both base and reasonable worst case scenarios taking into

considerations its principal risks and uncertainties including a reduction in revenue and EBITDA, the potential impact of COVID-

19 (refer page 6 for further information), a significant devaluation of the various currencies including Nigerian Naira and

possible inability of repatriation of funds from its subsidiaries. As part of this evaluation, the group has considered available

ways to mitigate these risks and uncertainties and has also considered that the group has committed facilities of USD 676m as

of the date of authorisation of financial statements (none of which are due to expire within the next 12 months), which should

take care of the group’s cash flow requirement under both base and reasonable worst case scenarios.

Having considered all the factors above impacting the group’s businesses, including downside sensitivities, and the mitigating

actions available including a reduction and deferral of capital expenditure, the directors are satisfied that the group has

adequate resources to continue its operational existence for the foreseeable future. Accordingly, the directors continue to

adopt the going concern basis of accounting in preparing the group’s financial statements.

4 Significant transactions/new developments

a) The shareholders declared a final dividend of 3 cents per ordinary share for the year ended 31 March 2020, which

was paid on 24 July 2020 to the holders of ordinary shares on the register of members at the close of business on 3

July 2020.

b) The proposed interim dividend of 1.5 cents per share was approved by the Board on 22 October 2020 and has not

been included as a liability as at September 30, 2020.

26

5 Segmental Information

The group’s segment information is provided on the basis of geographical clusters to the group’s chief executive officer (chief

operating decision maker - ‘CODM’) for the purposes of resource allocation and assessment of performance. The group’s

reporting segments are as follows:

Nigeria

East Africa - Comprising operations in Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia

Francophone Africa - Comprising operations in Niger, Gabon, T Chad, Congo B, DRC, Madagascar and Seychelles

Each segment derives revenue from mobile services, mobile money and other services. Expenses, assets and liabilities primarily

related to the corporate headquarters of the group are presented as Unallocated Items.

The amounts reported to CODM are based on the accounting principles used in the preparation of the financial statements.

Each segment’s performance is evaluated based on segment revenue and segment result.

The segment result is Underlying EBITDA i.e. earnings before interest, tax, depreciation and amortisation before exceptional

items as adjusted for charitable donation. This is the measure reported to the CODM for purposes of resource allocation and

assessment of segment performance.

Inter-segment pricing and terms are reviewed and changed by the management to reflect changes in market conditions and

changes to such terms are reflected in the period in which the changes occur.

Inter-segment revenues eliminated upon consolidation of segments/group accounting policy alignments are reflected in the

‘eliminations’ column.

Segment assets and segment liabilities comprise those assets and liabilities directly managed by each segment. Segment assets

primarily include receivables, property, plant and equipment, capital work in progress, right of use assets, intangibles assets,

inventories and cash and cash equivalents. Segment liabilities primarily include operating liabilities. Segment capital

expenditure comprises investment in property, plant and equipment, capital work in progress, intangible assets (excluding

licenses) and capital advances.

Investment elimination upon consolidation and resulting goodwill impacts are reflected in the ‘eliminations’ column.

27

Summary of the segmental information and disaggregation of revenue for the six months ended and as of 30 September 2020 is as follows:

Nigeria East

Africa

Francophone

Africa

Unallocated

Eliminations

Total

Revenue from external customers

Mobile services 717 556 410 - - 1,683 Mobile money 0 99 32 - - 131 Other (Incl. Towerco) - 2 2 - - 4

717 657 444 (3) - 1,815 Inter-segment revenue 1 2 1 - (4) - Total revenue 718 659 445 (3) (4) 1,815 Segment results: Underlying EBITDA

386 292 146 (13) 1 812

Less:

Depreciation and amortisation (excluding exceptional items)

115 107 98 1 7 328

Finance costs

196 Finance income

(4)

Share of profit of associate

(1) Charitable donation 0 2 1 2 - 5 Exceptional items pertaining to operating profit

- - 7 - - 7

Profit before tax 281

Other segment items

Capital expenditure 97 81 36 2 - 216

As of 30 September 2020

Segment assets 1,699 1,765 1,709 26,155 (21,716) 9,612 Segment liabilities 1,131 2,759 2,674 17,125 (17,395) 6,294 Investment in associate (included in segment assets above)

- - 3 - - 3

28

Summary of the segmental information and disaggregation of revenue for the six months ended and as of 30 September 2019

and as of 31 March 2020 is as follows:

Nigeria East

Africa Francophone

Africa Unallocated Eliminations Total

Revenue from external customers

Mobile services 636 503 395 - - 1,534 Mobile money 3 73 28 - - 104 Others (Incl. Towerco) 0 2 2 - - 4

639 578 425 (2) - 1,640 Inter-segment revenue 1 0 1 - (2) - Total revenue 640 578 426 (2) (2) 1,640 Segment results: Underlying EBITDA

341 233 140 (20) 25 719

Less:

Depreciation and amortisation (excluding exceptional items)

89 117 93 1 (0) 300

Finance costs

209 Finance income

(60)

Non-operating Income, (net)

(70) Share of profit of associate

(0)

Charitable donation 0 0 0 3 - 3 Exceptional items pertaining to operating profit (net)

3 5 10 - 3 21

Profit before tax

316

Other segment items

Capital expenditure 115 60 69 2 - 246

As of 31 March 2020

Segment assets 1,476 1,672 1,663 26,202 (21,688) 9,325 Segment liabilities 1,078 2,678 2,632 16,985 (17,329) 6,044 Investment in associate (included in segment assets above)

- - 3 - - 3

6 Taxation



Current tax 102 70

Deferred tax 34 18

Tax expense 136 88

29

7 Exceptional items

Underlying profit/loss before tax excludes the following exceptional items:




Add: Exceptional items

- Network modernisation (1) - 19

- Employee resctructuring (2) 7 -

- Share issue and IPO related expenses (3) - 7

- Reversal of Indemnities (4) - (72)

7 (46)


(1) this relates to the accelerated depreciation which arose on non-usable uninstalled equipment as part of the

modernisation programme. This specific programme started in 2017 and was completed during the year ended 31

March 2020.

(2) comprises the cost of restructuring in one of the group’s subsidiaries. Such exercise is expected to be completed

by December 2020.

(3) represents equity issuance related expenses under IPO of the company including cost and fair value changes of

derivatives taken for IPO proceeds. It also includes equity issuance cost of rights issue in a subsidiary.

(4) represents expiry of indemnity obligation on the publication of registration document of the company. This is

presented as ‘Non-operating income’ in the statement of comprehensive income.

Underlying profit after tax excludes the following exceptional items:



Profit after tax 145 228

-Exceptional item (as above) 7 (46)

- Tax on above exceptional items - (1)

- Deferred tax asset recognition (1) (10) (27)

(3) (74)


(1) Airtel Tanzania has carried forward losses and timing differences on which deferred tax was not recognized in the past.

Considering that Airtel Tanzania has been in continuous and cumulative profits and on the basis of likely timing and the

level of future taxable profits, the Group has determined that it is now probable that taxable profits will be available

30

against which the tax losses and temporary differences can be utilized in the foreseeable future. Consequently, the

deferred tax asset recognition criteria is met leading to recognition of USD 19m for the full financial year out of which

USD 10m was recognized during the six months ended 30 September 2020.

Profit attributable to non-controlling interests include benefit of USD 4m and USD 0m during the six months ended 30

September 2020 and 2019 respectively, relating to the above exceptional items.

8 Earnings per share (‘EPS’)

The details used in the computation of basic EPS:

The details used in the computation of diluted EPS:

Deferred shares have not been considered for EPS computation as they do not have right to participate in profits.

(1) The difference between the basic and diluted number of shares at the end of September 2020 being 698,693

(September 2019: 883,303) relates to awards committed but not yet issued under the group’s share-based payment

schemes.



Profit for the period attributable to owners of the Company 112 215

Weighted average ordinary shares outstanding for basic EPS 3,758,151,504 3,413,117,559

Basic EPS 3.0c 6.3c



Profit for the period attributable to owners of the Company 112 215

Weighted average ordinary shares outstanding for diluted EPS(1) 3,758,850,197 3,414,000,861

Diluted EPS 3.0c 6.3c

31

9 Property, plant and equipment (‘PPE’)

The following table presents the reconciliation of changes in the carrying value of PPE for the six months ended 30 September 2020 and 30 September 2019:

Leasehold

Improvements Building Land

Plant and

Equipment

Furniture &

Fixture Vehicles

Office

Equipment Computer Total

Capital work in progress

(2)

Gross carrying value Balance as of 1 April 2019 50 52 30 1,957 18 27 29 670 2,833 367

Additions 0 0 0 286 5 0 3 11 305 260

Disposals / adjustments (1) (1) - (0) (14) (2) (2) 0 (4) (23) (306)

Exchange differences (1) (1) (0) (64) (1) (0) (1) (13) (81) (5)

Balance as of 30 September 2019 48 51 30 2,165 20 25 31 664 3,034 316

Balance as of 1 April 2020 50 47 26 2,408 25 24 37 661 3,278 259

Additions / capitalisation 0 0 1 267 8 0 3 14 293 217

Disposals / adjustments (1) (0) 0 - (29) 0 (0) (0) 1 (28) (293)

Exchange differences 0 0 1 49 0 0 0 6 56 0

Balance as of 30 September 2020 50 47 28 2,695 33 24 40 682 3,599 183

Accumulated Depreciation Balance as of 1 April 2019 41 13 2 506 8 25 14 627 1,236 -

Charge 2 2 0 186 2 0 4 12 208 -

Disposals / adjustments (1) (1) - 0 (6) (1) (2) (0) (2) (12) -

Exchange differences (1) (0) 0 (42) (1) (0) (1) (11) (56) -

Balance as of 30 September 2019 41 15 2 644 8 23 17 626 1,376 -

Balance as of 1 April 2020 42 15 1 722 9 22 19 616 1,446 -

Charge 1 1 - 165 4 1 4 13 189 -

Disposals / adjustments (1) 0 (0) - (23) (0) (1) (0) 1 (23) -

Exchange differences 1 0 (0) 38 0 0 1 6 46 -

Balance as of 30 September 2020 44 16 1 902 13 22 24 636 1,658 -

Net carrying value As of 1 April 2019 9 39 28 1,452 10 2 15 43 1,597 367

As at 30 September 2019 7 36 28 1,522 11 2 14 38 1,659 314

As of 1 April 2020 8 32 25 1,686 16 2 18 45 1,832 259

As at 30 September 2020 6 31 27 1,793 20 2 16 46 1,941 183

(1) Related to the reversal of gross carrying value and accumulated depreciation on retirement of PPE and reclassification from one category of asset to another.

(2) The carrying value of capital work-in-progress as at 30 September 2020 and 2019 mainly pertains to plant and equipment

32

10 Cash and cash equivalents (‘C&CE’)

For the purpose of the statement of cash flows, C&CE are as follows:

As of


Cash and cash equivalents as per balance sheet 1,072 1,469

Balance held under mobile money trust 376 265

Bank overdraft

(239) (252)

1,208 1,482

11 Share capital

As of


Authorised shares

3,758,151,504 Ordinary shares of USD 0.5 each

(March 2020: 3,758,151,504 Ordinary shares of USD 0.5 each)

1,879 1,879

3,081,744,577 Deferred shares of USD 0.5 each (March 2020:3,081,744,577) 1,541 1,541

3,420 3,420

Issued, Subscribed and fully paid-up shares

3,758,151,504 Ordinary shares of USD 0.5 each

(March 2020: 3,758,151,504 Ordinary shares of USD 0.5 each) (1) (2) (3)

1,879 1,879

3,081,744,577 Deferred shares of USD 0.5 each (1)

(March 2020: 3,081,744,577)

1,541 1,541

3,420 3,420

(1) On 27 June 2019, the company sub-divided and converted each ordinary share of USD 1 into:

• One ordinary share of USD 0.5 each having the same rights and being subject to the same restrictions as the then

existing ordinary shares of the company; and

• One deferred share of USD 0.5 each. (Please refer terms/rights attached below.)

(2) On 3 July 2019 and 9 July 2019, the company completed its listing on the London Stock Exchange (LSE) and Nigerian

Stock Exchange (NSE) respectively and raised USD 680m (including share premium of USD 342m) from the issue of

676,406,927 new ordinary shares.

(3) During the previous year, in order to meet the share capital requirements for re-registration as a public limited

company, the company allotted 50,000 redeemable deferred shares of GBP 1 each (the ‘Redeemable Deferred Shares’)

to its parent. In accordance with approval of High Court in London on 22 October 2019, these shares were reduced to

Nil and the amount was paid to the shareholder.

33

Terms/rights attached to equity shares

The company has followings two classes of ordinary shares:

• Ordinary shares having par value of USD 0.5 per share. Each holder of equity shares is entitled to cast one vote per share

and carries a right to dividends.

• Deferred shares of USD 0.5 each. These deferred shares are not listed and are intended to be cancelled in due course. No

share certificates are to be issued in respect of the deferred shares. These are not freely transferable and would not affect the

net assets of the company. The deferred shareholders shall have no right to receive any dividend or other distribution or

return whether of capital or income. On a return of capital in a liquidation, the deferred shareholders shall have the right to

receive the nominal amount of each deferred share held, but only after the holder of each Other share (i.e. shares other than

the deferred shares) in the capital of the company shall have received the amount paid up on each such Other share held and

the payment in cash or in specie of GBP 100,000 (or its equivalent in any other currency) on each such Other shares held. The

company shall have an irrevocable authority from each holder of the deferred shares at any time to purchase all or any of the

deferred shares without obtaining the consent of the deferred shareholders in consideration of the payment of an amount

not exceeding one US cent in respect of all of the deferred shares then being purchased.

34

12 Borrowings

Non-current

As of


Secured

Term loans 0 0

Less: Current portion (A) (0) (0)

0 0

Unsecured

Term loans 558 522

Non- convertible bonds 2,404 2,353

2,962 2,875

Less: Current portion (B) (1,103) (429)

1,859 2,446

1,859 2,446

Current maturities of long-term borrowings (A + B) 1,103 429

Current

As of


Secured

Term loans 50 0

Bank overdraft - 4

50 4

Unsecured

Term loans 69 17

Bank overdraft 240 214

309 231

359 235

Additional amounts of USD 274m were drawn down under the Group’s loan and overdraft facilities.

Repayments of term loans amounting to USD 121m were made during the period ended 30 Sept 2020, in line with their stated

repayment terms.

35

13 Contingent liabilities and commitments

(i) Contingent liabilities

As of


(i) Taxes, Duties and Other demands (under adjudication / appeal / dispute)

-Income tax(1)

16 24

-Value added tax(2)

37 61

-Customs duty & Excise duty

5 7

-Other miscellaneous demands

12 13

(ii) Claims under legal cases including arbitration matters(3) (4) (5) 83 83

153 188

(1) the reduction of USD 8m primarily comprises of:

• reversal due to settlement of income tax cases in one of the subsidiaries amounting to USD 3m and

• reversal of USD 3m in one of the subsidiaries pertaining to income tax assessment on FY11 as it is no longer deemed to

be relevant, given the passage of time.

(2) the movement majorly comprises of release of contingent liabilities totaling to USD 23m following an arbitration review

conducted by the Ministry of Finance in one of the subsidiaries and consequent receipt of a revised assessment from the

tax authorities in respect of 2015 & 2016 tax returns which resulted in various matters being concluded or clarified.

(3) One of the subsidiaries of the group has been involved in a dispute with one of its vendors, with respect to disputed

invoices for services provided to the subsidiary under a service contract. Although the original order under the contract

was issued by the subsidiary for a total amount of Central African franc (CFA) 473,800,000 (approximately USD 1m). In

2014, the vendor initiated arbitration claiming a sum of approximately CFA 1.9bn (approximately USD 3.3m). Between

2015 and mid-May 2019, lower courts imposed penalty of CFA 35bn (approximately USD 63m) and ordered certain banks

of the subsidiary to release the funds. The subsidiary lodged an immediate appeal in the Supreme Court having jurisdiction

over the subsidiary for stay of execution. On 19 June, 2019, the Supreme Court granted a stay of execution. In July 2019

the Court of Appeal delivered a judgment confirming the order of mid-May 2019 condemning the subsidiary to pay the

said penalties. The subsidiary appealed to the Supreme Court and applied for a stay by challenging the merits of the ruling

of Court of Appeal. In September 2019, the Supreme Court issued a stay of execution against the July 2019 ruling of the

Court of Appeal. With this stay of execution, the vendor was not in a position to pursue the seizure of subsidiary’s bank

accounts. The vendor filed an appeal before the Common Court of Justice and Arbitration (CCJA) against the Supreme Court

stay order. Quite unexpectedly, the CCJA on 22 April 2020 annulled the September 2019 stay order of the Supreme Court

and lifted the stay of execution. On 2 June 2020, the Supreme court issued a stay order, basis which the subsidiary is able

to challenge seizure of its bank accounts that were re-activated by the vendor on the basis of 22 April 2020 CCJA decision.

On 19 June 2020, the vendor filed an application with CCJA challenging the stay order granted in favor of the subsidiary by

36

the Supreme Court on 2 June 2020. The Subsidiary has filed its statement of defense on 9 October 2020 against the

application filed by the vendor on 19 June 2020 with CCJA, arguing as preliminary objection on jurisdiction of the Court.

Even though a favorable stay order is received and is undergoing actions, pending the final outcome, the group opines that

it is appropriate to disclose this matter as a Contingent Liability for USD 63m (included in the closing contingent liability).

(4) Increase in legal contingent liabilities is on account of change in assessment. One of the subsidiaries of the group is

involved in a dispute with one of its distributors, with respect to alleged unpaid commissions, bonuses and benefits,

totaling approx. USD 13m, over a period of around eleven years of its business relationship with the subsidiary. In March

2012, the distributor filed a claim against the subsidiary in the High Court. On 4 October 2016, the High Court ruled against

the subsidiary and ordered to pay the claimed amount of approx. USD 13m to the distributor. On 5 October 2016, the

subsidiary filed an appeal in the Court of Appeal against the order of the High Court, which on 24 July 2020 was ruled

against the subsidiary. On 7 August 2020, the subsidiary has filed an appeal against the decision of the Court of Appeal, in

the Supreme Court.

Despite the strength of the subsidiary’s line of defence, as both the High Court and Court of Appeal have ruled against the

subsidiary, it is appropriate to disclose this matter as contingent liability for USD 13m, pending the decision of the Supreme

Court.

(5) The above mentioned increase is offset by reduction in contingent liability related to legal cases majorly comprising of

reassessment of possible outflow of resources against these matters.

There are uncertainties in the legal, regulatory and tax environments in the countries in which the group operates, and

there is a risk of demands, which may be raised based on current or past business operations. Such demands have in past

been challenged and contested on merits with appropriate authorities and appropriate settlements agreed. Other than

amounts provided where the group believes there is a probable settlement and contingent liabilities where the group has

assessed the additional possible amounts, there are no other legal, tax or regulatory obligations which may be expected

to be material to the financial statements.

Guarantees:

Guarantees outstanding as of 30 September 2020 and 31 March 2020 amounting to USD 6m and USD 10m respectively

have been issued by banks and financial institutions on behalf of the group. These guarantees include certain financial bank

guarantees which have been given for sub judice matters and the amounts with respect to these have been disclosed under

capital commitments, contingencies and liabilities, as applicable, in compliance with the applicable accounting standards.

(ii) Commitments

The group has contractual commitments towards capital expenditure (net of related advances paid) of USD 329m and USD

234m as of 30 September 2020 and 31 March 2020 respectively.

37

14 Related Party disclosure

(a) List of related parties

i. Parent company

Airtel Africa Mauritius Limited

ii. Intermediate parent entity

Network i2i Limited

Bharti Airtel Limited

Bharti Telecom Limited

iii. Ultimate controlling entity

Bharti Enterprises (Holding) Private Limited. It is held by private trusts of Bharti family, with Mr. Sunil Bharti Mittal’s

family trust effectively controlling the company.

iv. Associate

Seychelles Cables Systems Company Limited

v. Other entities with whom transactions have taken place during the reporting period

a. Fellow subsidiaries

Bharti Airtel International (Mauritius) Limited

Nxtra Data Limited

Bharti Airtel Services Limited

Bharti International (Singapore) Pte Ltd

Bharti Airtel (UK) Limited

Bharti Airtel (USA) Limited

Bharti Airtel (France) SAS

Bharti Airtel Lanka (Private) Limited

Bharti Hexacom Limited

b. Other related parties

Airtel Ghana Limited

Singapore Telecommunication Limited

38

vi. Key Management Personnel (‘KMP’)

Raghunath Venkateswarlu Mandava

Segun Ogunsanya

Ian Ferrao (since 2 September 2019)

Michael Foley (since 3 February 2020)

Jaideep Paul

Razvan Ungureanu

Luc Serviant (since 2 December 2019)

Daddy Mukadi

Neelesh Singh

Ramakrishna Lella

Olivier Pognon

Rogany Ramiah (since 6 May 2019)

Stephen Nthenge (since 2 May 2019)

(b) The details of significant transactions with the related parties for the six months ended 30 September, 2020 and 2019

respectively, are provided below:


30 September 2020 30 September 2019 Sale / rendering of services Bharti Airtel (UK) Limited 30 43

Bharti Airtel Limited 3 4

Purchase / receiving of services Bharti Airtel (France) SAS 8 7

Bharti Airtel (UK) Limited 17 27

Bharti Airtel Limited 5 13

Network i2i Limited 3 3

Guarantee and collateral fee expense Bharti Airtel Limited 5 5

Purchase of assets Bharti International (Singapore) Pte Ltd - 4

Dividend Paid Airtel Africa Mauritius Limited 63 -

39

15 Fair Value of financial assets and liabilities

The category wise details as to the carrying value, fair value and the level of fair value measurement hierarchy of the group’s

financial instruments are as follows:

Carrying value as of Fair value as of

30 September 2020 31 March 2020 30 September 2020 31 March 2020

Financial assets

FVTPL

Derivatives

- Forward and option contracts

Level 2 6 9 6 9

- Currency swaps and interest rate swaps

Level 2 0 2 0 2

Investments Level 2 0 0 0 0

Amortised cost

Security deposits

8 7 8 7 Trade receivables

138 132 138 132

Cash and cash equivalents

1,072 1,010 1,072 1,010 Other bank balances

7 6 7 6

Balance held under mobile money trust

376 295 376 295

Other financial assets

62 67 62 67

1,669 1,528 1,669 1,528


FVTPL

Derivatives

- Forward and option contracts

Level 2 6 4 6 4

- Currency swaps and interest rate swaps

Level 2 0 0 0 0

- Embedded derivatives Level 2 2 3 2 3

Amortised cost

Borrowings - fixed rate Level 1 2,404 2,353 2,478 2,274 Borrowings - fixed rate Level 2 69 48 70 48 Borrowings

848 710 848 710

Trade payables

431 416 431 416 Mobile money wallet balance

372 292 372 292

Other financial liabilities

361 476 361 476 4,493 4,302 4,568 4,223

The following methods/assumptions were used to estimate the fair values:

• The carrying value of bank deposits, trade receivables, trade payables, short-term borrowings, other current financial

assets and liabilities approximate their fair value mainly due to the short-term maturities of these instruments.

• Fair value of quoted financial instruments is based on quoted market price at the reporting date.

• The fair value of non-current financial assets, long-term borrowings and other financial liabilities is estimated by

discounting future cash flows using current rates applicable to instruments with similar terms, currency, credit risk and

remaining maturities.

• The fair values of derivatives are estimated by using pricing models, wherein the inputs to those models are based on

readily observable market parameters. The valuation models used by the group reflect the contractual terms of the

derivatives (including the period to maturity), and market-based parameters such as interest rates, foreign exchange

40

rates, volatility etc. These models do not contain a high level of subjectivity as the valuation techniques used do not

require significant judgement and inputs thereto are readily observable.

During the six months ended 30 September 2020 and year ended 31 March 2020 there were no transfers between Level 1 and

Level 2 fair value measurements, and no transfer into and out of Level 3 fair value measurements.

The following table describes the key inputs used in the valuation (basis discounted cash flow technique) of the Level 2 financial

assets/liabilities as of 30 September 2020 and 31 March 2020:

Financial assets / liabilities Inputs used

- Currency swaps, forward and option contracts

Forward foreign currency exchange rates, Interest rate

- Interest rate swaps

Prevailing / forward interest rates in market, Interest rate

- Embedded derivatives

Prevailing interest rates in market, inflation rates

- Other financial assets / fixed rate borrowing / other financial Prevailing interest rates in market, Future payouts, Interest rates

Liabilities

16 Events after the balance sheet date

No subsequent events or transactions have occurred since the date of statement of financial position or are pending that would

have material effect on the financial statements as at and for the six months ended 30 September 2020.

41

Appendix

Additional information pertaining to three months ended September 30, 2020

Consolidated Statement of Comprehensive Income (unaudited)


For three months ended

Notes 30 September 2020 30 September 2019

Income Revenue 6 965 844 Other income 5 7

970 851

Expenses

Network operating expenses 174 156 Access charges 93 94 License fee / spectrum usage charges 47 48 Employee benefits expense 7 77 61 Sales and marketing expenses 47 46 Reversal of impairment loss on financial assets (2) (3) Other expenses 8 105 76 Depreciation and amortisation 9 167 162

708 641

Operating profit 262 210

Finance costs 10 94 90 Finance income 10 (2) (32) Non-operating income - 2 Share of profit for associate (0) (0)


Tax expense / (credit) 12 82 54

Profit for the period 88 96

Profit before tax (as presented above) 170 150 Add: Exceptional items (net) 7 3


Profit after tax (as presented above) 88 96 Add: Exceptional items (net) 4 (11)


Other comprehensive income ('OCI')

Items to be reclassified subsequently to profit or loss:

Net gain due to foreign currency translation differences 39 7 Net (loss)/gain on net investments hedge (8) 7 Net loss on cash flow hedge - (1) 31 13

Items not to be reclassified subsequently to profit or loss:

Re-measurement loss on defined benefit plans (1) (0) Tax credit on above (0) 0 (1) (0)

Other comprehensive gain for the period 30 13

42

For three months ended

Notes 30 September 2020 30 September 2019

Total comprehensive income for the period 118 109

Profit for the period attributable to: 88 96

Owners of the Company 70 90 Non-controlling interests 18 6

Other comprehensive loss for the period attributable to: 30 13 Owners of the Company 32 13 Non-controlling interests (2) (0)

Total comprehensive income for the period attributable to: 118 109

Owners of the Company 102 103 Non-controlling interests 16 6

43

Alternative performance measures (APMs)

Introduction

In the reporting of financial information, the Directors have adopted various APMs. These measures are not defined by International Financial Reporting Standards (IFRS) and therefore may not be directly comparable with other companies APMs, including those in the Group’s industry.

APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.

Purpose

The Directors believe that these APMs assist in providing additional useful information on the underlying trends, performance and position of the Group.

APMs are also used to enhance the comparability of information between reporting periods and geographical units (such as like-for-like sales), by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid users in understanding the Group’s performance.

Consequently, APMs are used by the Directors and management for performance analysis, planning, reporting and incentive-setting purposes.

The Directors believe the following metrics to be the APMs used by the Group to help evaluate growth trends, establish budgets and assess operational performance and efficiencies. These measures provide an enhanced understanding of the Group’s results and related trends, therefore increasing transparency and clarity into the core results of the business.

The following metrics are useful in evaluating the Group’s operating performance:

APM

Closest equivalent IFRS measure

Adjustment to reconcile to IFRS measure

Table Reference (1)

Definition and Purpose

Underlying EBITDA and Margin

Operating Profit

• Depreciation and amortisation

• Charity and donation

• Exceptional Item

Table A

The Group defines underlying EBITDA as Operating profit/ (loss) for the

period before depreciation and amortization, charity and donation and

adjusted for exceptional items.

Group defines underlying EBITDA Margin as underlying EBITDA divided

by total revenue.

Underlying EBITDA and margin are measures used by the Directors to

assess the trading performance of the business and are therefore the

measure of segment profit that the Group presents under IFRS.

Underlying EBITDA and margin are also presented on a consolidated

basis because the Directors believe it is important to consider

profitability on a basis consistent with that of the Group’s operating

segments. When presented on a consolidated basis, underlying EBITDA

and margin are APM.

Depreciation and amortisation is a non-cash item which fluctuates

depending on the timing of capital investment and useful economic life.

Directors believe that a measure which removes this volatility improves

comparability of the Group’s results period on period and hence is

adjusted to arrive at underlying EBITDA and Margin.

Charity and donations are not related to the trading performance of the Group and hence adjusted to arrive at underlying EBITDA and Margin.

Exceptional items are additional specific items that because of their size,

nature or incidence in the results, are considered to hinder comparison

of the Group’s performance on a period to period basis and could distort

the understanding of our performance for the period and the

comparability between periods and hence are adjusted to arrive at

underlying EBITDA and Margin.

44

APM



Table Reference (1)


Underlying Operating Expenditure

Expenses

• Access charges • Depreciation and

amortisation • Charity and

Donation • Exceptional items

Table B

The Group defines Underlying Operating Expenditure as expenses excluding access charges, depreciation and amortisation, charity and donation and adjusted for exceptional items.

The Directors view Underlying Operating Expenditure to be a meaningful measure to track the actual cost of the Group’s business, excluding exceptional items, as well as to track the efficiency and productivity of the business.

The Directors view access charges in net level (net of revenue and cost) in revenue account and hence adjusted to arrive at Underlying Operating Expenditure.

Depreciation and amortisation is a non-cash item which fluctuates

depending on the timing of capital investment and useful economic life.

Directors believe that a measure which removes this volatility improves

comparability of the Group’s results period on period and hence is

adjusted to arrive at Underlying Operating Expenditure.

Charity and donations are not related to the trading expenses of the Group and hence adjusted to arrive at Underlying Operating Expenditure.

Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s trading expenses on a period to period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at Underlying Operating Expenditure.

Underlying Profit / (Loss) Before Tax

Profit / (Loss) Before Tax

• Exceptional Items

Table C

The Group defines Underlying Profit / (Loss) before Tax as Profit/ (loss) before tax adjusted for exceptional items.

The Directors view Underlying Profit / (Loss) Before Tax to be a meaningful measure to analyse the Group’s profitability.

Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period to period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at Underlying Profit / (Loss) Before Tax.

Effective tax rate

Reported tax rate

• Exceptional items • Foreign Exchange

rate movements • One off tax

impact of prior period, tax litigation settlement and impact of tax on permanent differences

Table D

The Group defines effective tax rate as reported tax rate (reported tax charge divided by reported profit before tax) adjusted for exceptional items, foreign exchange rate movements and one off tax items of prior year adjustment, tax settlements and impact of permanent differences on tax.

This provides an indication of the current on-going tax rate across the Group.

Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period to period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at effective tax rate.

Foreign exchange rate movements are specific items that are non-tax deductible in few of the entities which are loss making and where DTA is not yet triggered and hence are considered to hinder comparison of the Group’s effective tax rate on a period to period basis and therefore excluded to arrive at effective tax rate.

One off tax impact on account of prior year adjustment, any tax litigation settlement and tax impact on permanent differences are additional specific items that because of their size and frequency in the results, are considered to hinder comparison of the Group’s effective tax rate on a period to period basis.

45

APM



Table Reference (1)


Adjusted effective tax rate

Reported tax rate

• Deferred tax triggered during the year and accounted as exceptional tax item.

Table D

The Group defines adjusted effective tax rate as effective tax rate after normalizing any impact arising on account of deferred tax triggered during the year for the first time which has been reported as exceptional item.

This provides an indication of the tax rate across the Group for the current financial year after considering any deferred tax triggered during the year.

Underlying profit/(loss) after tax

Profit/(loss) for the period

• Exceptional Items

Table E

The Group defines Underlying Profit / (Loss) after Tax as profit / (loss) for the period adjusted for exceptional items.

The Directors view Underlying Profit / (Loss) after Tax to be a meaningful measure to analyse the Group’s profitability.

Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period to period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at Underlying profit/(loss) after tax.

Earnings per share before exceptional items

EPS • Exceptional

Items Table F

The Group defines Earnings per share before exceptional items as profit/ (loss) for the period before exceptional items attributable to owners of the Group divided by the weighted average number of ordinary shares in issue during the financial period.

This measure reflects the earnings per share before exceptional items for each share unit of the Group.

Exceptional items are additional specific items that because of their size, nature or incidence in the results, are considered to hinder comparison of the Group’s performance on a period to period basis and could distort the understanding of our performance for the period and the comparability between periods and hence are adjusted to arrive at earnings for the purpose of Earnings per share before exceptional items.

Operating Free Cash Flow

Cash generated from operating activities

• Income tax paid, • Changes in

working capital, • Other non-cash

items, • Non-operating

income, • Charity and

donation • Exceptional items • Capital

expenditures

Table H

The Group defines Operating Free Cash Flow as net cash generated from operating activities before income tax paid, changes in working capital, other non-cash items, non-operating income, charity and donation and exceptional items less capital expenditures. The Group views Operating Free Cash Flow as a key liquidity measure, as it indicates the cash available to pay dividends, repay debt or make further investments in the Group.

Free Cash Flow

Cash generated from operating activities

• Changes in working capital,

• Capital expenditures

• Cash tax • Cash Interest

Table I

The Group defines Free Cash Flow as net cash generated from operating activities after change in operating working capital, cash tax & cash interest. It is computed as “Underlying EBITDA less change in operating working capital, capital expenditure, cash tax and cash interest.”

The Group views Free Cash Flow as a key liquidity measure, as it indicates the cash available to pay dividends, repay debt or make further investments in the Group.

Net Debt and Leverage Ratio

No direct equivalent

• Borrowing • Lease liabilities • Cash and cash

equivalent • Fair value hedges

Table J

The Group defines Net debt as borrowings including lease liabilities less cash and cash equivalents, processing costs related to borrowings and fair value hedge adjustments.

The Group defines Leverage Ratio as net debt divided by underlying EBITDA.

The Directors view Net debt and Leverage Ratio to be a meaningful measure to monitor the Group’s ability to cover its debt through its earnings.

46

(1) Refer “Reconciliation between GAAP and Alternative Performance Measures” for respective table.

Some of the Group’s APMs are translated at constant exchange rates. Constant exchange rates are the average actual periodic exchange rates for the previous financial period and are used to eliminate the effects of exchange rate fluctuations in assessing performance. Actual exchange rates are the average actual periodic exchange rates for that financial period.

Changes to APMs

The Group has made a small number of re-classifications in its financial statements, and to conform with the current classification, has reclassified the previous period amounts (consistent with Annual consolidated financial statements for the year ended 31 March 2020; for details refer Group’s annual consolidated financial statements for the year ended 31 March 2020). The impact of such reclassifications has been duly considered in the APMs (Table D, Table H and Table I).

Reconciliation between GAAP and Alternative Performance Measures

Table A: Underlying EBITDA and Margin

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Operating profit $m 472 395

Add:

Depreciation and amortisation $m 328 319

Charity and donation $m 5 3

Exceptional items $m 7 2

Underlying EBITDA $m 812 719

Revenue $m 1,815 1,640

Underlying EBITDA Margin (%) $m 44.7% 43.9%

Table B: Underlying Operating Expenditure

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Expenses $m 1,351 1,256

Less:

Access charges $m (177) (184)

Depreciation and amortisation $m (328) (319)

Charity and donation $m (5) (3)

Exceptional items $m (7) (2)

Underlying Operating Expenditure $m 834 748

Table C: Underlying Profit / (Loss) Before Tax

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Profit / (loss) before tax $m 281 316

Exceptional items (net) $m 7 (46)

Underlying profit / (loss) before tax $m 288 270

47

Table D: Effective tax rate and adjusted Effective tax rate

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Profit before

taxation

Income tax expense

Tax Rate % Profit before

taxation

Income tax expense

Tax Rate %

Reported Effective tax rate $m 281 136 49% 316 88 28%

Adjusted for:

Exceptional Items (provided below) $m 7 10 (46) 28

Foreign Exchange rate movements for Non DTA OPCO's & Hold Co's

$m 36 (28)

One-off tax adjustment $m 6 1

Effective tax rate $m 324 152 47% 242 117 48%

Deferred tax triggered during the year $m (10) (27)

Adjusted effective tax rate $m 324 142 44% 242 90 37%

Exceptional items

1. Deferred tax asset recognition $m (10) (27)

2. Network modernisation $m 19 (1)

3. Employee restructuring $m 7

4. Reversal of indemnities $m (72)

5. Share issue and IPO related expenses $m 6

6. Finance Cost $m 1

Total $m 7 (10) (46) (28)

Table E: Underlying Profit / (Loss) After Tax

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Profit / (loss) after tax $m 145 228

Exceptional items $m (3) (74)

Underlying profit / (loss) after tax $m 142 154

Table F: Earnings Per Share before exceptional items

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Profit / (loss) after tax before exceptional items attributable to owners of the Group (Refer Table G)

$m 113 141

Weighted average number of ordinary shares in issue during the financial period.

million 3,758 3,413

Earnings per share before exceptional items $ Cents 3.0 4.1

48

Table G: Earnings Per Share –Restated

Description Unit of measure Half Year ended

Sep-20 Sep-19

Weighted average shares million 3,758 3,413

Weighted average shares - Restated million 3,758 3,758

Profit for the period attributable to owners of the parent $m 112 215

Operating and Non-Operating Exceptional Items $m 7 (46)

Tax Exceptional Items $m (10) (28)

Non-Controlling Interest Exceptional Item $m 4 (0)

Profit attributable to parent company shareholder - pre-Exceptional items $m 113 141

Basic EPS $ cents 3.0 6.3

EPS before exceptional items $ cents 3.0 4.1

Basic EPS -Restated (1) $ cents 3.0 5.7

EPS before exceptional items -Restated (1) $ cents 3.0 3.7

(1) EPS has been restated considering all the shares as of 30 September 2020 had been issued on 1 April 2019 for like for like comparison.

Table H: Operating Free Cash Flow

Description Unit of

measure

Half Year ended

Sep-20 Sep-19

Net cash generated from operating activities $m 744 623

Add: Income tax paid $m 118 69

Net cash generation from operation before tax $m 862 692

Less: Changes in working capital

Increase in trade receivables $m 0 12

(Increase)/decrease in inventories $m 3 (0)

Decrease in trade payables $m 7 20

Increase in mobile money wallet balance $m (80) (27)

(Decrease)/Increase in provisions $m 0 (1)

Increase in deferred revenue $m (9) (8)

Decrease in income received in advance $m 1 8

Decrease in other financial and non-financial liabilities $m 0 9

Increase in other financial and non-financial assets $m 21 2

Operating cash flow before changes in working capital $m 805 707

Other adjustments $m (5) 7

Charity and donation $m 5 3

Exceptional items $m 7 2


Less: Capital Expenditure $m (216) (246)

Operating Free Cash Flow $m 596 473

49

Table I: Free Cash Flow

Description Unit of

measure

Half Year ended

Sep-20 Sep-19


Less: Capital Expenditure $m (216) (246)

Operating free cash flow $m 596 473

Add: Changes in working capital

Increase in trade receivables $m (0) (12)

(Increase)/decrease in inventories $m (3) 0

Decrease in trade payables $m (7) (20)

Decrease in income received in advance $m (1) (8)

Increase in deferred revenue $m 9 8

Operating cash after changes in working capital $m 594 441

Less: Cash Tax $m (118) (69)

Less: Cash Interest (net) $m (157) (162)

Free Cash Flow $m 319 210

Table J: Net Debt and Leverage

Description Unit of

measure

As at As at

Sep-20 Sep-19

Long term borrowing, net of current portion $m 1,859 2,700

Short-term borrowings and current portion of long-term borrowing $m 1,462 797

Add: Processing costs related to borrowings $m 4 5

Add/(less): Fair value hedge adjustment $m (24) (30)

Less: Cash and Cash Equivalents $m (1,072) (1,469)

Net Debt excluding Lease Obligations $m 2,229 2,003

Add: Lease Obligations $m 1,230 1,188

Net Debt including Lease Obligations $m 3,459 3,191

Underlying EBITDA (LTM) $m 1,607 1,402

Leverage (LTM) Times 2.2 2.3

50

INDEPENDENT REVIEW REPORT TO AIRTEL AFRICA PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2020 which comprises the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of financial position, the interim condensed consolidated statement of cash flows, the interim condensed consolidated statement of changes in equity and related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors’ responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.

Use of our report

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP

Statutory Auditor

London, United Kingdom

22 October 2020

51

Glossary

Technical and Industry Terms

4G Data customer A customer having 4G handset and who used at least 1 MB on Group’s GPRS, 3G & 4G network in the last 30 days.

Airtel Money ARPU

Airtel Money ARPU, which is derived by dividing total Airtel Money revenue during the relevant period by the average number of Airtel Money customers and dividing the result by the number of months in the relevant period.

Airtel Money customer base Total number of subscribers who has done any Airtel Money usage event in last 30 days.

Airtel Money customer penetration

It is computed by dividing the Airtel Money customer base by total customer base.

Airtel Money transaction value

It is defined as value of any financial transaction performed on Airtel Money platform.

Airtel Money transaction value per customer per month

It is computed by dividing the total Airtel Money transaction value on Group’s AM platform during the relevant period by the average number of Airtel Money customers and dividing the result by number of months in the relevant period.

ARPU

Average revenue per user per month, which is derived by dividing total revenue during the relevant period by the average number of customers and dividing the result by the number of months in the relevant period.

Average customers Average customers are derived by computing the average of the monthly average customers for the relevant period.

Broadband Base Stations It includes all the 3G and 4G Base stations deployed across all technologies/spectrum bands.

Capital expenditure It is not a GAAP measure and is defined as investment in capital work in progress (CWIP) gross fixed assets (tangible and intangible excluding spectrum/licence) and excluding provision on capital work in progress (CWIP).

Constant currency

The Group has presented certain financial information that is calculated by translating the results for the current financial year and prior financial years at a fixed ‘constant currency’ exchange rate, which is done to measure the Organic performance of the Group.

Churn Churn is derived by dividing the total number of customer disconnections during the relevant period by the average number of customers and dividing the result by number of months in the relevant period.

Customer A customer is defined as a unique subscriber with a unique mobile telephone number who used any of Airtel’s services in the last 30 days.

Customer base Total number of subscribers that used any of our services (voice calls, SMS, data usage or Airtel Money transaction) in the last 30 days.

Data ARPU Data ARPU is derived by dividing total data revenue during the relevant period by the average number of Data customers and dividing the result by the number of months in the relevant period.

Data customer base Total subscribers who consumed at least 1MB on the Group’s GPRS, 3G or 4G network in the last 30 days.

Data customer penetration It is computed by dividing the data customer base by total customer base.

Data usage per customer

It is calculated by dividing the total MBs consumed on the Group’s network during the relevant period by the average data customer base over the same period and dividing the result by the number of months in the relevant period.

Underlying EBITDA It is not a GAAP measure and is defined as operating profit before depreciation, amortisation, CSR cost and exceptional items.

Underlying EBITDA margin It is not a GAAP measure and is computed by dividing underlying EBITDA for the relevant period by total revenue for the relevant period.

Earnings per share (EPS) EPS is computed by dividing the profit for the period attributable to the owners of the company by the weighted average number of ordinary shares outstanding during the period.

Free cash flow Free cash flow defined as Operating free cash flow less cash interest, cash tax and change in operating working capital.

Leverage

It is not a GAAP measure and is computed by dividing Net Debt as at the end of the relevant period by underlying EBITDA for preceding last 12 months (from the end of the relevant period). This is also referred to as leverage ratio.

Minutes of usage Duration in minutes for which a customer uses the Group’s network. It is typically expressed over a period of one month. It includes incoming, outgoing and in-roaming minutes.

Mobile service Mobile service is defined as the core Telecom services including revenue from tower operation services provided by the Group and excludes Airtel Money services.

Net debt It is not a GAAP measure and is defined as the long-term borrowings, short term borrowings and leased liability less cash and cash equivalents.

52

Network towers/sites

Comprises of base transmission system (BTS) which holds the radio transceivers (TRXs) that define a cell and coordinates the radio links protocols with the mobile device. It includes all the ground based, roof top and in building solutions as at the end of the period.

Operating free cash flow It is computed by subtracting Capital expenditure from underlying EBITDA.

Operating leverage Operating leverage is measured to derive the operating efficiency of the business and is computed by dividing the Operating expenditure (excluding regulatory charges) by total revenue.

Operating profit It is a GAAP measure and is computed as revenue less operating expenditure including depreciation & amortisation and operating exceptional items.

Reported currency

Reported currency is the currency where actual periodic exchange rates are used to translate the local currency financial statements of OPCO into US dollar. Under Reported currency the assets and liabilities are translated into US dollar at the exchange rates prevailing at the reporting date whereas the statements of profit and loss are translated into US dollar at monthly average exchange rates.

Smartphone Smartphone is defined as mobile phone with interactive touch screen that allows the user to access internet apart from making calls and sending text messages.

Smartphone Penetration It is computed by dividing the smartphone devices by total customer

Total MBs on network Total MBs consumed (uploaded & downloaded) by customers on the Group’s GPRS, 3G and 4G network during the relevant period.

Voice minutes of usage per customer per month

It is computed by dividing the total voice minutes of usage on Group’s network during the relevant period by the average number of customers and dividing the result by number of months in the relevant period.

Weighted average number of shares

The weighted average number of shares is calculated by taking the number of outstanding shares and multiplying the portion of the reporting period those shares covered, doing this for each portion and, finally, summing the total.

Abbreviations

3G Third-generation technology

4G Fourth-generation technology

ARPU Average revenue per user

bps Basis points

bn Billion

CSR Corporate Social Responsibility

EBITDA Earnings before interest, tax, depreciation and amortisation

EPS Earnings per share

GAAP Generally Accepted Accounting Principles

GB Gigabyte

IFRS International Financial Reporting Standards

IPO Initial Public Offering

OPCO Operating company

KPIs Key performance indicators

m Million

MB Megabyte

P2P Person to Person

ppts Percentage points

SIM Subscriber Identification Module

Single RAN Single radio access network

SMS Short Messaging Service

UoM Unit of measure

53

Risk Factors

The Group’s business and the industry in which it operates, together with all other information contained in this document, including, in particular, the risk factors summarized below. Additional risks and uncertainties relating to the Group that are not currently known to the Group, or that the Group currently deem immaterial, may individually or cumulatively also have a material adverse effect on the Group’s business, results of operations and financial condition. For a detailed review of the group’s Risk management processes and its principal risks, refer to the disclosure contained in Pg. 56-64 of the FY20 Annual reports and account. Principal risks summarized

1. We operate in an increasingly competitive environment and aggressive competition by existing players or the entry of a new player could put a downward pressure on prices, adversely affecting our revenue and profitability.

2. As our Airtel money business grows, so does the regulatory and operational risks associated with operating a mobile financial services business.

3. Our industry is continually facing pressure from non-conventional and over-the-top (OTT) players (internet-based alternatives to traditional telephony services) which provide similar services for our customers.

4. Disruptions and uncertainties caused by the COVID-19 pandemic may impact the Group’s ability to operate its business effectively and achieve its objectives.

5. An inability to invest and upgrade our network and IT infrastructure would affect our ability to compete effectively in the market.

6. Cybersecurity threats through internal or external sabotage or system vulnerabilities could potentially result in customer data breaches, service downtimes, impact critical services or damage our assets.

7. Increases in costs relative to the growth in revenues are a threat to our profitability, liquidity, and ability to compete effectively.

8. In some of the countries in which we operate, there is a shortage of skilled telecommunications professionals. Any failure to successfully recruit, train, integrate, retain and motivate key skilled employees could have a material adverse effect on our business, the results of our operations, financial conditions, and prospects.

9. Our internal control environment is subject to the risk that controls may become inadequate due to changes in internal or external conditions, new accounting requirements, or delays or inaccuracies in reporting.

10. Our telecommunications networks are subject to risks of technical failures, aging infrastructure, human error, willful acts of destruction or natural disasters.

11. Our multinational footprint means we are constantly exposed to the risk of adverse currency fluctuations and the macroeconomic conditions in the markets where we operate.

12. The group may be adversely impacted by any material uncertainty affecting its majority shareholder due to the existence of certain covenants in its debt notes which are guaranteed by the Group’s majority shareholder.

13. We operate in a diverse and dynamic legal and regulatory environment. A failure to comply with relevant laws and regulations could lead to regulatory penalties, sanctions, and reputational damage.

14. Regulators are putting an increasing focus on Know your customer (KYC) and Quality of service (QoS) regulations and a failure to comply could lead to unanticipated regulatory penalties, sanctions, tax levies, and reputational damage.

54

Neither the Company nor the directors accept any liability to any person in relation to the half-year financial report except to the

extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any

untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial

Services and Markets Act 2000.

The Directors of Airtel Africa plc are listed on pages 66 to 68 of the Group’s annual report for the year ended 31 March 2020. No

changes to the Directors have been made since the date of the annual report.

Statement of Director’s Responsibilities

We confirm to the best of our knowledge:

a) the unaudited condensed consolidated financial statements have been prepared in accordance with IAS 34, “Interim Financial

Reporting”, as issued by the International Accounting Standards Board and as adopted by the European Union, and gives a

true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included

in the consolidation as a whole; and

b) the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency

Rules sourcebook 4.2.7 and Disclosure Guidance and Transparency Rules sourcebook 4.2.8.

This responsibility statement was approved by the board of directors on 22 October 2020 and is signed on its behalf by:

Raghunath Mandava

Chief Executive Officer

23 October 2020

airtel africa plc...airtel africa is a leading provider of telecommunications and mobile money...

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